IBF HOUSING MARKET MONITOR - Q2/2013 David Duffy
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IBF HOUSING MARKET MONITOR Q2/2013 With a commentary by David Duffy – ESRI
Quarterly IBF HOUSING MARKET MONITOR Q2/2013
Trends:
Overview
Indicator Latest quarter One year ago % change
Dwellings listed for sale 9,901 9,587 3.3%
Dwelling completions 2,009 1,998 0.6%
Dwelling commencements* 700 852 -17.8%
Yr/yr change in transaction prices 1.2% -14.4%
Yr/yr change in list prices -4.0% -15.0%
Mortgage approvals 4,408 4,018 9.7%
Mortgage drawdowns 2,857 2,837 0.7%
Transactions 5,642 5,222 8.0%
Mortgage APRC 3.4% 3.1%
*Only for April and May of each year, due to data availability.Commentary IBF HOUSING MARKET MONITOR Q2/2013
The future development of the Irish The CSO Residential Property Price Index shows an increase in prices
nationally in the second quarter, with prices up by 1.2%. This reflects an
housing market will play a significant role upturn in Dublin house prices, up by 4.2% year-on-year.
in determining the pattern of the long-term
recovery of the Irish economy. At some point, a more positive view of the outlook for the market,
reflected in people’s price expectations, will translate into increasing
Activity in the housing market is influenced by a range of factors demand for homeownership. Although very important, house price
including incomes, prices, price expectations, interest rates and expectations are difficult to measure. The expectation that house
affordability. The latest data suggest that the housing market continues prices would continue to grow, delivering strong capital gains, made
to reflect the overall macro-economic picture, showing signs of homeownership attractive at a time when house price levels were high.
stabilisation and some moderate recovery. What is noticeable is the The expectation of a fall in house prices reduced housing demand
regional element of the improvement to date. While much of the through the impact of an expected capital loss from homeownership.
focus on housing in Ireland has been on the performance of the A change in expectations can change the relative attractiveness of
national housing market, the total market is made up of distinct local homeownership. House price expectations will play a key role in
housing markets. A key determinant of housing market performance is determining the outlook for the housing market. List prices drawn from
location. Within the national market, local housing markets can show the daft.ie database may provide some evidence that expectations may
distinct trends in relation to price and activity, which in many cases be beginning to change. This is particularly evident in Dublin, the only
are determined by underlying fundamentals in the local area and the area to show an annual increase in list prices, up 5.3%, although the
location of the market. Local housing markets can be driven by changes rate of decline has continued to moderate in most other areas.
in regional economic conditions, income and employment.
The view that the market is beginning to stabilise and starting to recover
Data for Q2 2013 suggests that the regional dimension is an important may also be reflected in the number of properties coming onto the
aspect of the housing market at present. Where regional data are market, with an annual increase of 3% in the number of properties listed
available for the indicators in the IBF Housing Market Monitor, in most for sale nationally. Again, a regional divide is evident with only Dublin
cases they show that the improving activity levels primarily reflect a more and Leinster showing year-on-year gains. Other supply indicators paint a
positive Dublin market. similar picture. Housing completions are in line with Q2 2012 levels andCommentary IBF HOUSING MARKET MONITOR Q2/2013
have increased when compared with Q1 2013. Nearly 10,500 houses Having weakened in Q1 2013, as activity slowed following a surge at
were completed in Ireland in 2012. Housing investment has fallen to an the end of 2012 due to the ending of mortgage interest relief, mortgage
exceptionally low level over the course of the crisis. However, population approvals and drawdowns both recovered in the second quarter.
growth has continued and, in recent years, the growth in the number of Mortgage approvals rose by an annual rate of 10% while drawdowns
households has been accommodated through a reduction in the stock of increased by a more moderate 1%. At the same time, property
vacant dwellings. transactions were 8% higher. In contrast to other indicators there was a
decline in the Dublin region, while the other regions all saw an annual
Data from the 2011 Census suggest that, in key urban areas, the stock increase in transaction volumes. However, as with the other regions,
of vacant houses is not very large. This is particularly the case for houses transaction levels in Dublin increased when compared with Q1 2013.
in the greater Dublin area. A significant increase in demand to buy
houses in these urban locations could exhaust the vacant stock and, The stabilisation of the housing market is in keeping with the evidence
given the low level of house-building, this would begin to put upward emerging of a slow improvement in the economic outlook for Ireland.
pressure on prices. Given the limited stock of vacant dwellings in high Although uncertainty remains about the international economic outlook,
demand locations, and given the low level of new build, any increase an increasing number of economic indicators are showing improvement
in household numbers, driven by demographic change, will eventually rather than continued decline. Many of these relate to factors that
begin to put upward pressure on rents, depending on migration flows. underpin the housing market. While the pace of any economic recovery
There are signs in the Dublin area that the stock of vacant dwellings has remains slow, in time it would be expected that this will contribute to an
been largely exhausted. The remaining vacant dwellings in Ireland may improvement in the housing market.
not be in locations where new households are being formed so that over
time, demographic pressures may emerge for new dwellings to be built
in suitable locations.
David Duffy, Economist, ESRIHousing IBF HOUSING MARKET MONITOR Q2/2013
Supply
Properties listed for sale 2011 2012 2013
Source: daft.ie
The number of properties listed nationally has increased 3%
compared to the same quarter of last year, after a decline in 14,000
the previous quarter. Nearly 10,000 properties were listed for
sale nationally during 2013 Q2. 12,000
Breaking the numbers down into five main regions, reflecting
10,000
urban-rural and provincial divides, only Dublin and Leinster
saw year-on-year gains in the number of properties listed
8,000
for sale, 22% for Dublin and 5% for Leinster. The 2,300
properties listed in Dublin are the most for any quarter since
6,000
Q2 2011. Other Cities (Cork, Galway, Limerick and Waterford)
saw a decline of 7% in listings compared to Q2 2012.
Munster saw a small 2% decline in properties listed, while 4,000
Connacht and Ulster had a fall in listings of 7%.
2,000
Q1 Q2 Q3 Q4Housing IBF HOUSING MARKET MONITOR Q2/2013
Supply 2011 2012 2013 Source: DoECLG
3,000
2,500
New dwellings completed 2,000
The number of dwellings completed in the second quarter of 2013 1,500
was, at 2,009, nearly identical to the amount completed in the
same quarter of 2012 (1,998). Completions in both Dublin and 1,000
Other Cities experienced a strong gain of 35%.
500
The amount of new dwellings completed increased in Leinster
by 7%, from 604 to 646. Munster’s completions declined by 5%
compared to Q2 2012, however this marks a sharp decrease in the Q1 Q2 Q3 Q4
rate of decline which has been at over 20% in the previous two
years. In Connacht-Ulster, the decline in completions continued to
2011 2012 2013
be high at 23%. Source: DoECLG
1,600
New dwellings commenced 1,400
1,200
At the time of publication, figures for commencements were only
available up to May 2013. In the months of April and May there 1,000
were 700 commencements of new homes in Ireland, compared to
800
850 in the same two months in 2012.
600
The decline in commencements is driven by Dublin, where April
and May saw only 107 commencements compared to 256 in the 400
same months of last year. This marks a change from the surge in 200
commencements in the previous quarter. Leinster was the only
region with an increase in commencements, of 15%. All other
Q1 Q2 Q3 Q4
regions of the country saw declines of the order of 10% for these
Please note: The Q2 2013 figure is for April and May 2013 only
two months compared to last year. as June 2013 data was not available at time of publication.Housing IBF HOUSING MARKET MONITOR Q2/2013
Source: CSO
Prices 4%
2%
0%
-2%
-4%
-6%
-8%
Transaction prices -10%
-12%
-14%
The national residential property price index has seen its first year-on-year
-16%
gain since Q4 2007, with a 1.2% increase. Dublin house prices are driving
-18%
the increase, with the index now 4.2% higher than a year ago. Prices in the
rest of the country on the other hand were 1% lower. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013
Quarter-on-quarter trends are also positive, with prices nationally in Q2
Dublin Ex-Dublin National
2013 2.3% higher than in Q1, with both Dublin and the rest of Ireland
Source: daft.ie
broadly following the national increase. 5%
List prices 0%
List prices are useful as a lead indicator, as the CSO index is based on -5%
mortgages and can lag trends in prices by a couple of months, due to the
gap between when a property is valued and when it is drawn down. -10%
Dublin is still the only area to show gains in list prices, with an increase of
-15%
5.3% compared to last year. Leinster and other Irish cities show falls of
between 6.3% and 7.1% respectively. Other Cities in particular saw their
-20%
first quarter-on-quarter gain, of 0.2%, since Q1 2007. In Munster there
was a break in the trend towards stabilising prices, with a fall in list prices of
-25%
10.7%. Connacht and Ulster saw a similar price fall of 12.2%. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013
Dublin National Other cities
Munster Leinster Connacht-UlsterProperty IBF HOUSING MARKET MONITOR Q2/2013
Transactions
& Mortgages
Source: RPPR
2011 2012 2013
1,800
Property transactions 1,600
1,400
Nationally, property transactions increased 8% in 2013
Q2, compared to the same period last year, from 5,222 1,200
to 5,642.
1,000
Dublin was the only area to register a decline in
transactions during the quarter, with a fall of 5% 800
compared to Q2 2012 to just over 1,700 transactions
during the quarter. In Other Cities, as well as in Leinster 600
and Connacht-Ulster, there were increases in transactions
400
of more than 15%. In Munster, the increase at 10% was
more modest. 200
Dublin Other cities Leinster Munster Connacht UlsterProperty IBF HOUSING MARKET MONITOR Q2/2013
Transactions 2011 2012 2013 Source: IBF
& Mortgages 6,000
5,000
4,000
Mortgage approvals 3,000
and drawdowns 2,000
Mortgage approvals offer an early indicator of credit conditions in 1,000
the mortgage market, which underpins the bulk of transactions in
the housing market. The number of approvals in the second quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
of this year increased by 10% compared with last year, to 4,400. Approvals Drawdowns
Mortgage drawdowns generally reflect transactions and again offer Source: Central Bank of Ireland
an indicator of credit conditions. In the second quarter of 2013, the 4.0%
number of drawdowns related to transactions was stable in year-
3.5%
on-year terms, recording a small rise of 1% compared to Q2 2012,
to 2,857. 3.0%
2.5%
Cost of mortgage credit 2.0%
The average percentage rate of charge (APRC) was essentially stable at 1.5%
3.43% compared to last quarter. However, this marks a 0.3 percentage
1.0%
point increase compared to the same quarter of last year.
0.5%
0.0
0.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2011 2012 2013About the IBF HOUSING MARKET MONITOR Q2/2013
Report
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]IBF HOUSING MARKET MONITOR Q2/2013
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