More houses have come on the Irish market for
sale in the past three months than in any previous quarter since 2008, according
to the House Price Report released today by Ireland's biggest property website
Daft.ie. Almost 15,000 properties came to market between April and June as the
national average asking price rose 9% from the same period last year. The
average asking price nationwide is now €187,000, compared to €171,000 a year ago
and €380,000 at the peak.
House prices in Dublin have risen 21% in the past
year, with the surrounding counties of Meath, Kildare, Wicklow and Louth also
experiencing annual price increases of between 6% and 13%. In the other major
cities, increases occurred in Galway and Cork of 5% and 2% respectively. In
Limerick city, prices were down by 9%, whilst Waterford city experienced a
decrease of 4%.
The Daft House Price Report, which also analyses
the Property Price Register, highlights that there were 28% more transactions at
the start of 2014 than a year previously. This also represents the 10th
consecutive quarter of growth in the number of property sales.
Commenting on the report, economist with Daft.ie,
Ronan Lyons said: "There has been much talk of the housing market being
illiquid, with a lack of homes available to buy. The evidence from the period
between April and June is that the tide may be turning. More than 6,000 Dublin
homes were listed during the second quarter, the largest number since early
2008. As a result, the total stock sitting on the market rose in Dublin from
less than 2,300 in March to more than 2,800 in June. Further increases in supply
will be needed, though, to work through the backlog in pent-up demand from the
years of the crash.
Ronan Lyons asks
in the report: "Are luxury condos the solution
to Ireland's urban housing shortage?"
He adds: "There are simply not enough dwellings
relative to families in Ireland's urban areas. To those living in many rural
areas, blighted by half-built ghost estates, this may seem an odd solution.
However, what first-time buyers prize now is access to amenities, in particular
the amenity of job creation, which goes hand in hand with population density.
The discount for distance from urban life has grown significantly in Ireland
So far, so simple - build more family homes. And yet there is a further twist.
Earlier this year, Ireland's Housing Agency commissioned research to investigate
how best to deal with Ireland's demographic trends, in particular rising numbers
of families living in or near cities and large towns. Their headline finding
probably came as something of a surprise to most - there are enough family homes
The problem, of course, is that families are not the ones living in a large
chunk of family homes. Instead, many of Ireland's most desirable family homes
are lived in by empty nesters. What the Irish market lacks compared to its
counterparts in other developed countries is both carrot and stick. The stick,
for want of a better word, is property tax. In most developed countries, annual
property tax bills for living in a family home are large enough that when the
family home becomes an empty nest, the couple decide to downsize and save.
It may be an unpopular thing to say but - if we want housing in Ireland to be
affordable - the Local Property Tax is far too low, rather than far too high.
This, of course, is very easy for a commentator to say, but next to impossible
for a government to bring in, unless of course it offered a revenue-neutral
switch away from VAT and income tax, towards property tax.
Assuming that this will not happen in the next five years, what can be done?
Well, if the stick does not exist, a bigger carrot is needed. Currently, an
empty nester in Dublin looks around and sees very little that they could see
themselves moving into in their early sixties. Talk of assisted living
communities is certainly worthwhile - but is really a step further on, for
people in their 80s, not their 60s, which is when the market needs movement."
Irish Home Prices 2014: Dublin
prices surged 22% in 12 months to May
Dublin's net effective office
rents surge 39.3% in 12 months - - fastest growth in Europe
Dublin housing rents surge;
39,250 BTL accounts in arrears
Irish home mortgages paid in
Q1 2014 at lowest since 1972
One quarter of Irish
households jobless; More than double EU average
Dublin Housing Crisis: 75 item
laundry list doesn't make a strategy