Irish House Prices 2014: In the year to
February, residential property prices at a national level, increased by 8.1%.
This compares with an increase of 6.3% in January and a decrease of 2.6%
recorded in the twelve months to February 2013.
The CSO said residential property prices rose by
0.1% in the month of February. This compares with a decrease of 0.7% recorded in
January and a decrease of 1.5% recorded in February of last year.
In Dublin residential property prices fell by
0.6% in February and were 13.3% higher than a year ago. Dublin house prices fell
by 0.6% in the month and were 13.6% higher compared to a year earlier. Dublin
apartment prices were 10.5% higher when compared with the same month of 2013.
See Tables 6, 7 and 8. 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 0.9% in February compared with a
decrease of 2.1% in February of last year. Prices were 4.2% higher than in
House prices in Dublin are 48.5% 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 50.0% 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 46.4%. Overall, the
national index is 46.7% lower than its highest level in 2007.
Property prices up
0.1% on the month and 8.1% on the year: David McNamara, economist at Davy,
comments - - "Irish residential property prices rose 0.1% in February, up 8.1%
on the year. Property prices are now 46.7% from peak, according to the CSO
index. House prices rose 0.3% on the month, so annual inflation is now 8.2% –
the strongest pace since June 2007. The current fall from peak for house prices
is now 45.1%. Apartment prices were up 0.2% on the month and 4.3% on the year
but are still down 56.7% from peak. Property price inflation in Dublin was 13.3%
year-on-year in January and 4.3% outside the capital. So the recovery in
property prices is now beginning to broaden out from the capital, albeit the
annual comparison is flattered somewhat by the sharp dip in prices in Q1 2013
following the end of mortgage interest reliefs. A surge in transactions in
December, caused by the ending of exemptions on property tax for first-time
buyers and those buying new or empty homes, likely distorted the market between
December and January, with transactions falling back sharply in that month. We
therefore expected some rebound in prices in February. Notably, the monthly
growth (+0.9%) outside the capital accounted for the entire rise in national
prices as prices in Dublin fell for a second consecutive month (-0.6%).
Nevertheless, we would expect the tight supply in many urban areas to underpin
prices in the near term. Data from Daft.ie show the supply of homes for sale at
its lowest level since early 2007 in urban areas (Figure 2). This lack of supply
reflects the dearth of building activity since the recession began. However, it
also reflects slow progress in dealing with delinquent mortgage loans in
arrears. Irish banks now look set to step up voluntary sales and repossessions
in 2014 under pressure from the Central Bank’s new resolution targets. Indeed,
55% of the solutions offered by banks in Q3 2013 were legal letters threatening
repossession. This equates to 25,000 borrowers, but the final number of actual
repossessions is unclear. Many may return to performance on foot of legal
threats, while others may be offered a write-down on existing debt as part of a
sustainable solution. However, repossessions do look set to rise from current
low levels, providing new supply to the market.
On the construction side, the pipeline of new builds remains at low levels. In
2013, completions fell again to 8,301 from 8,488 in 2012, well short of the
20-25,000 new builds required to keep pace with household formation in the
coming years. However, the run rate of completions did pick up at the end of the
year and into January. Completions in the year to January were up 1.1% on the
year, the first annual rise since May 2007 (Figure 3). Housing starts have also
begun to rise, up 16.5% at end-2013 on 2012, albeit off exceptionally low
levels. Encouragingly, the bulk of the rise in housing starts was focused on
Dublin. Although welcome, this new supply will take time to hit the market –
meaning further price rises in the near term."
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