Irish House Prices 2013: In the year to December,
residential property prices at a national level, increased by 6.4%. This
compares with an increase of 5.6% in November and a decrease of 4.5% recorded in
the twelve months to December 2012. Residential property prices grew by 0.3% in
the month of December. This compares with an increase of 0.6% recorded in
November and a decrease of 0.5% recorded in December of last year. In Dublin
residential property prices grew by 0.3% in December and were 15.7% higher than
a year ago.
The CSO said today that inn Dublin residential property prices grew by 0.3% in
December and were 15.7% higher than a year ago. Dublin house prices grew by 0.1%
in the month and were 15.3% higher compared to a year earlier. Dublin apartment
prices were 20.8% higher when compared with the same month of 2012.
However, it should be noted that the sub-indices for apartments are based on low
volumes of observed transactions and consequently suffer from greater volatility
than other series.
The price of residential properties in the Rest of Ireland (i.e. excluding
Dublin) rose by 0.1% in December compared with no change in December of last
year. Prices were 0.4% lower than in December 2012.
Overall Decline: House prices in Dublin are 47.4% lower than at their
highest level in early 2007. Apartments in Dublin are 54.5% lower than they were
in February 2007. Residential property prices in Dublin are 49.1% lower than at
their highest level in February 2007. The fall in the price of residential
properties in the Rest of Ireland is somewhat lower at 46.8%. Overall, the
national index is 46.4% lower than its highest level in 2007.
Conall Mac Coille, chief economist at
Davy, comments- - "Looking forward, price falls in
early 2013 following the expiry of mortgage interest reliefs will now fall out
of the annual comparison. Even if prices are flat in Q1 2014, annual house price
inflation will accelerate to 9% by March.
However, the bigger picture is whether housing market transactions will
accelerate from still low levels. To date, overall property transactions on the
property register in 2013 equalled €5.8bn, up from €4.9bn in 2012. However, cash
buyers account for over 50% of this total. Mortgage lending in 2013 looks set to
equal around €2.3bn by year-end, well below the €2.6bn in 2014. At the start of
the year, some commentators had expected mortgage lending to equal €4bn in 2013
based on banks’ committed lending facilities. Indeed, mortgage approvals look
set to equal €3bn in 2013, above the €2.8bn recorded in 2012. But the growing
gap between mortgage approvals and actual lending is indicative of the lack of
supply in urban areas such as Dublin pushing up on prices.
In part, this lack of supply reflects the dearth of building activity since the
recession began. However, it is also somewhat artificial, reflecting slow
progress in dealing with delinquent mortgage loans in arrears. Irish banks now
look set to step up voluntary sales and repossessions in 2014. Central Bank data
show that of the 43% of mortgage accounts in arrears offered solutions in Q3
2013, 55% constituted voluntary surrender or repossession. Given that in
September 2013 there were 81,000 owner-occupier and 26,000 buy-to-let accounts
in 90+ day arrears among the six banks covered by the Mortgage Arrears
Resolution Targets (MART), it appears that close to 25,000 (55%) mortgage
holders have been threatened with repossession. In September, Governor Patrick
Honohan indicated this was especially true for buy-to-let loans in arrears,
where 74% of offers constituted voluntary surrender or legal notices.
Voluntary sales and repossessions look set to rise from exceptionally low levels
given the extent of non-performing loans. But, as we set out in our recent 'Davy
Economics Monthly', many mortgage loans may be brought back to performance
without resorting to repossession. Also, the growing gap between mortgage
approvals and actual mortgage lending suggests there is latent demand to absorb
greater supply from repossessions and voluntary sales. In the near-term, Irish
house price inflation looks set to accelerate towards 10%."
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