Property
Irish mortgage approvals in 2014 at 36-year low; Exceed paid loans
By Michael Hennigan, Finfacts founder and editor
Feb 3, 2015 - 3:56 AM

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The number of Irish mortgage approvals in 2014 rose by 43.6% to 26,576, according to latest figures from the Banking & Payments Federation Ireland. At a 36-year low the number compares with 26,777 in 1978.

The actual mortgage paid data has yet to be published and as shown in the chart above there is a gap in the number of approvals and payments - in 2013 approvals were at 18,520, 24% above loans paid of 15,881.

Data from the Department of the Environment, Community & Local Government show that in 2006, the peak year of the bubble, approvals were at 114,600 with a value of €32bn compared with a 2014 value of  €4.7bn.

In 2011 mortgage approvals at 12,900 were the lowest since the 1970 total of 12,500 when the data series began.

The Irish population estimate in April 2014 was 4.6m according to the CSO compared with 3.0m in 1971 and 3.4m in 1979.

Last week the Central Bank announced restrictions on home loan lending but the new rules made a special provision for first-time buyers who are allowed to borrow as much as 90% of a property valued at up to €220,000.

The average asking price for a home in Dublin was about €269,000 at the end of last year, according to website Myhome.ie.

Price/Earnings multiple for Dublin houses is double 1993 level

The anticipated surge in mortgage approvals ahead of the confirmation of the new rules did not materialise and in the quarter house purchases accounted for 2,564 of the mortgage approvals each month with 216 remortgages or top-ups.

In total the €4.7bn in mortgages approved was up 50.4% on 2013 while the average mortgage approval value in the three months to the end of November amounted to €183,813, up 2.2% on a year earlier. The average mortgage for a house purchase rose by 1.2% to €188.378.

Cash buyers

Cash buyers accounted for nearly half of all residential property purchases the first half of 2014.

The IBF/PwC Mortgage Market profile for the second quarter of the year shows that 8,228 new mortgages were drawn down in the six months to June 30th while the Property Price Register showed that 15,435 properties were sold during this period (a 28% rise on the same period in 2013), suggesting that 47% of all property purchases were funded without a mortgage.

Dublin prices and data on empties

In the year to December, residential property prices at a national level, increased by 16.3%. This compares with an increase of 16.2% in November and an increase of 6.4% recorded in the twelve months to December 2013 according to the CSO.

In Dublin residential property prices rose by 0.2% in December and were 22.3% higher than a year ago.

Meanwhile housing rents in Dublin were reported last November to be just 10% below their 2007 bubble peak.

Irish new house completions in 2012 at 8,500, were at the lowest since the 1960s. The data  series begins in 1970 when a total of 13,887 units were completed.

There were 8,300 housing completions in 2013 and only 1,360 units were completed in Dublin.

Last August research [pdf] by the Economic and Social Research Institute (ESRI) estimated that almost 60,000 houses need to be built in Dublin by 2021 to meet population demands.

However, most of the country, outside the greater Dublin area and regional cities, requires no additional housing to be built and is expected to have an oversupply of vacant property by the end of the decade.

The analysis shows that, while demographic change implies a total of 180,000 additional housing units will be required between 2011 and 2021, the large number of existing vacant dwellings will reduce this requirement, by half, to 90,000 units.

Dr Edgar Morgenroth said: “Of the 90,000 additional housing units required between 2011 and 2021, over 60 per cent (54,000 units) are needed in Dublin and a further 26% are needed in counties Louth, Meath, Kildare and Wicklow. Thus the requirement for additional housing units is projected to be highly concentrated in the Greater Dublin area.”

In Ireland, vacant housing units rose from 140,000 in 2002 according to the census of that year; 266,000 according to the April 2006 census and an estimated an estimated 345,000 houses or 17% of the Irish housing stock was vacant according to a 2010 report published by the Urban Environment Project at University College Dublin.

Morgenroth wrote in his briefing: "Excluding holiday homes, some 230,000 housing units were vacant in 2011, while the demographic projections indicate that over the 10-year period to 2021 some 180,000 households will need to be added. This would imply that no new properties would need to be built in that time period if all vacant properties were in locations that matched the projected population growth."

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