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IBF HOUSING MARKET MONITOR Q4 / 2013 With a commentary by Ronan Lyons – Assistant Professor of Economics, Trinity College Dublin
IBF HOUSING MARKET MONITOR Q4/2013
With a commentary by Ronan Lyons – Assistant Professor of Economics, Trinity College Dublin
IBF HOUSING MARKET MONITOR Q4/2013QuarterlyTrends:Overview
Indicator Latest quarter One year ago % change
Dwellings listed for sale 7,516 7,337 2.4%
Dwelling completions 2,619 2,452 6.8%
Dwelling commencements 1,272 959 32.6%
Yr/yr change in transaction prices 6.4% -4.5%
Yr/yr change in list prices 0.2% -9.2%
Mortgage approvals 4,917 4,777 2.9%
Mortgage drawdowns 4,716 5,578 -15.5%
Transactions 8,548 9,117 -6.2%
Mortgage APRC 3.4% 3.6%
Commentary
The Dublin-focused recovery in property values is now over a year old and well recognised in national commentary. According to the Central Statistics Office, over the course of 2013, the average house
price in Dublin increased by over 15%, while in the rest of the country prices fell
marginally, by 0.4%. But what does this mean and what is happening to other key
indicators of the housing market? The latest IBF Housing Market Monitor contains a
number of insights of use for policymakers concerned with both the sharp rise in prices
in Dublin and the huge variation in market conditions around the country.
An encouraging sign from the Monitor is the volume of transactions registered in 2013.
There had been concerns that the end of mortgage interest relief in December 2012
would effectively take demand from 2013 and bring it forward to 2012. However, with
some transactions for 2013 still to be registered, it is already clear that 2013 saw more
transactions, rather than fewer. In 2012, there were 25,000 transactions in the housing
market, compared to 18,000 in 2011. The total for 2013 was over 27,500. What is
encouraging is that this 10% increase was relatively evenly spread across the country,
rather than concentrated in Dublin.
If there is a hangover from the end of mortgage interest relief, it seems to be in the
mortgage market, rather than the housing market. While there was a 6% increase in
mortgage approvals in 2013 compared to 2012, the number of mortgages actually
drawn down fell. There were just under 13,500 transaction-related mortgages issued
in 2013, compared to just over 14,000 in 2012. Nonetheless, the figure represents a
significant improvement on the 2011 figure (just 11,000). The question now is whether
the number of mortgages drawn down continues to increase in 2014 and 2015, as
transactions – rather than prices – are probably the fundamental barometer of the
health of the housing market.
While trends in both transactions and the mortgage market are encouraging, the
supply side of the market continues to remain a concern. There were 36,000 properties
listed for sale in 2013, 7% higher than in 2012 but still considerably below the level
seen two years ago (41,000). The picture in Dublin is somewhat better, with 8,500
properties listed during 2013, more than in either 2011 (8,300) or 2012 (6,800). As
prices rise, this does indeed appear to be encouraging more people to sell their homes.
But resale of second-hand homes can only do so much, as market shortages in Dublin
have highlighted. Perhaps the most startling thing to emerge from the report is just
how few new homes are being built. Fewer than 1,400 homes were completed in
Dublin during 2013, when prices rose at double-digit rates, compared to more than
2,200 during 2010, when prices were falling at double-digit rates. While this marks
a small increase on the figure for 2012, it is surely of huge concern to policymakers,
as is the lack of commencements of new homes. Fewer than 1,500 new homes were
started in Dublin in 2013, although that is double the number started in 2012. This
compares to roughly 10,000 new households being formed a year in the capital. Taking
into account up to 5,000 family homes that come on the market each year due to
down-trading and executor sales still leaves a significant shortage of accommodation in
Dublin that is growing year on year.
The government appears to be aware that, if there is anything policy should be aiming
for in relation to house prices, it is that these should be stable, at least adjusting for
inflation. While overhang from the bubble still persists in many parts of the country,
Dublin has had a lack of housing for over a year and yet there is still almost no response
in construction. The obstacles to the resumption of meaningful levels of activity
in construction in the capital must be understood and soon, if Dublin is to remain
competitive and affordable for those on average incomes.
Ronan Lyons, Assistant Professor of Economics, TCD.
IBF HOUSING MARKET MONITOR Q4/2013
Housing Supply
Properties listed for sale The fourth quarter of 2013 saw a modest increase in properties listed for sale, compared to the same quarter of last year, up 2% to 7,500. The majority of the additional listings were in Dublin, where they grew 23% to over 1,800. Leinster saw a small 2% rise in homes listed, while all other regions saw declines of between 4% and 6%.
For the year as a whole, 36,500 properties were listed for sale in Ireland, a 7% increase from 34,000 in 2012. The majority of this increase in explained by Dublin with a quarter more listings than last year (1,700 more properties). Leinster and Munster saw increases of 4% and 6%, respectively, while in other Irish cities and Connacht-Ulster, listings were mostly unchanged from 2012.
Source: daft.ie2011 2012 2013
Q1 Q2 Q3 Q4
2,000
4,000
6,000
8,000
10,000
12,000
14,000
IBF HOUSING MARKET MONITOR Q4/2013
IBF HOUSING MARKET MONITOR Q4/2013
Source: DoECLG
Q1
2011 2012 2013
Q2 Q3 Q4
500
1,000
1,500
2,000
2,500
3,000
New dwellings completed Over 2,600 dwellings were completed in Ireland in the fourth quarter of 2013, a 7% increase with respect to the same quarter of last year. Overall in 2013 there were 8,300 completions, a drop of 2% compared to 2012.
Irish cities other than Dublin saw the largest year-on-year increase in completions, nearly doubling with respect to Q4 2012 to 226 and recovering from a very strong drop last quarter. Dublin saw year-on-year completions growth of 11% while Connacht and Ulster saw their first year-on-year increase in completions since 2008 at 16%. In Leinster 5% fewer homes were completed while the fall in Munster was 7%.
Comparing the whole of 2013 to 2012, there were increases in completed dwellings in Dublin, other Irish cities, and Leinster, of 7%, 20% and 2% respectively. In Munster completions fell by 9% and in Connacht-Ulster by 10%.
Housing Supply
Housing Supply
New dwellings commenced 1,272 new homes were commenced in the final quarter of 2013, an increase of almost one third on the same three months of last year. For the sixth quarter of the last seven, there was a significant year-on-year increase in the number of commencements in Dublin, with 528 in Q4 2013 compared to 243 a year earlier. Growth in Leinster and Munster was in the region of 25%, while commencements in Connacht-Ulster slowed by 13% compared to a year previously. Commencements in the four other cities remained minimal (24 in Q4 2013).
For the year as a whole, the number of commencements in Dublin effectively doubled to 1,451. For the rest of the country, however, there were 3,257 dwellings commenced, compared to 3,276 in 2012.
Source: DoECLG
Q1
2011 2012
Q2 Q3 Q4
2013
200
400
600
800
1,000
1,200
1,400
1,600
IBF HOUSING MARKET MONITOR Q4/2013
Source: CSO
Source: daft.ie
-25%
-20%
-15%
-10%
-5%
0%
5%
Connacht-Ulster
Munster
Leinster
Other cities
Dublin
National
Q2Q1 Q3 Q4 Q2Q1 Q1 Q2Q3 Q4
2011 2012 2013
10%
15%
Q3 Q4
Q2Q1 Q3 Q4 Q2Q1 Q3 Q4 Q1
2011 2012 2013
Dublin
Ex-Dublin
National
Q2 Q3 Q4
2%
-18%
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
4%
10%
6%
8%
12%
14%
16%
Housing Prices
Transaction pricesDuring the final quarter of 2013, residential property prices rose 3.9% in Dublin and 1.6% in the rest of Ireland, with a national average increase of 2.6%. For 2013 as a whole, prices were essentially flat in Ireland outside Dublin, falling by 0.4%. In Dublin on the other hand prices were 15.7% higher than Q4 2012, the largest year-on-year increase since Q4 2006. The national average is up 6.4% compared to the end of 2012, marking the third consecutive quarter of year-on-year increases.
List prices National list prices increased 0.3% quarter-on-quarter and 0.2% year-on-year. This marks the first year-on-year increase in national prices since Q3 2007. The increase is exclusively led by Dublin, where prices increased 10.6% year-on-year and 3.1% quarter-on-quarter. In Leinster, list prices recovered 0.5% in the quarter, the first quarter-on-quarter gain since Q2 2007. In all other Irish regions, prices in Q4 decreased in comparison to Q3 by between 2.4% and 2.9%.
IBF HOUSING MARKET MONITOR Q4/2013
Property Transactions & Mortgages
Property transactionsIn Q4 2013 there were 6% fewer property transactions in Ireland, as they fell to 8,550 compared to 9,100 in the same quarter of last year. There were declines in transactions in all regions of Ireland, with Dublin showing the smallest decline at 1%. The fall in transactions in Munster and Connacht and Ulster was broadly in line with the national average of 6%, with the decline in Leinster being of 9% and that in Irish cities other than Dublin of 17%.
For 2013 as a whole, transactions were up 10% to 27,500, with all regions seeing more properties change hands than in 2012. The increase in transactions in Dublin was slightly below average at 9%, while Leinster and Munster both saw increases of around 10%. In other Irish cities transactions only rose 6% while in Connacht and Ulster they rose 17%.
2011 2012 2013
Dublin LeinsterOther cities Munster Connacht Ulster
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2,400
2,600
2,800
3,000
3,200
Source: RPPR
IBF HOUSING MARKET MONITOR Q4/2013
Property Transactions & Mortgages
Mortgage approvals and drawdownsMortgage approvals offer an early indicator of credit conditions in the mortgage market, which underpins the bulk of transactions in the housing market. Over 4,900 mortgages were approved in the final quarter of 2013, the same number as in the previous quarter and 3% more than in the same quarter of 2012. Overall 17,000 mortgages were approved in 2013, up from 16,000 in 2012.
Mortgage drawdowns generally reflect transactions and again offer an indicator of credit conditions. Almost 4,800 mortgages were drawn down in this quarter, down 15% from the very high number registered in Q4 2012. For the year as a whole there were 13,400 drawdowns, 5% fewer than in 2012.
Cost of mortgage creditThe average percentage rate of charge (APRC) for the fourth quarter was 3.43%, a small fall in the rate compared to the previous quarter of less than 0.1 percentage points. Compared to the same quarter of last year, rates have fallen 13 basis points.
Source: Central Bank of Ireland
Q2Q1 Q3 Q4 Q2Q1 Q3 Q4 Q1 Q2
2011 2012 2013
0.0
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Q3 Q40.0
Q2Q1 Q3 Q4 Q2Q1 Q3 Q4
Approvals Drawdowns
1,000
2,000
3,000
4,000
5,000
6,000
2011 2012 2013
IBF HOUSING MARKET MONITOR Q4/2013
Source: IBF
The information presented here is based on a range of publicly available reports and data-sets and collated by Identify Consulting for IBF. It is intended to bring together the range of housing and mortgage market data available and to constructively inform on-going analysis and assessment of the housing and mortgage market.
Figures are presented by quarter and by region, where possible. Unless otherwise specified, quantities given for particular quarters (and/or regions) are totals, while prices are averages for the entire quarter. The sources used for compiling the report are as follows:
• the Department of the Environment, Community & Local Government [dwelling completions and commencements]
• the Central Statistics Office [transactions price index]
• the Central Bank of Ireland [average percentage rate of charge for credit]
• the Property Price Register [number of transactions]
• daft.ie [properties listed for sale and asking price index]
• the Irish Banking Federation [mortgage approvals and drawdowns]
About the Report
IBF HOUSING MARKET MONITOR Q4/2013
IBF HOUSING MARKET MONITOR Q4/2013D
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