SCSI/CBI Housing Market Report - Q2 2018 - Society of Chartered Surveyors ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
SCSI/
CBI
Housing
MarketRepor
t
Q220182018 Q2 Residential Property Price Survey
The CBI/SCSI Residential Property Price Survey is a quarterly sentiment survey of estate agents,
auctioneers and surveyors, as well as those with a more indirect interest in the industry such as
economists, market analysts and academics.
While the main focus is on participants’ house price expectations, it also canvasses opinion on the
factors underlying these and on the level of sales activity. The survey is a snapshot of respondents’
expectations at a particular point in time and so can provide only limited information about possible
future property price developments. The survey also provides a measure of uncertainty regarding those
expectations, which is a useful complement to the available information on the domestic property
market.
Key Highlights
• While majority expect increase there has been a marked shift in responses towards price
decreases or stagnation across national and Dublin markets.
• Higher proportions of Dublin-based respondents anticipate a price decrease over the
medium-to-long term horizon than elsewhere.
• The median degree of expected price inflation nationally is 5 per cent (+1 Year) and 8 per
cent (+3 Years). Dublin expectations have moderated from 7 per cent to 2 per cent (+1 Year),
while +3 Year expectations have eased from 15 to 6 per cent since the previous survey.
• The availability of bank credit was deemed to be the primary factor behind the anticipated
price changes both nationally and in Dublin. ‘Other’ issues, including level of interest rates
and the perception of value, was ranked as the second-most cited reason.
• Our index of sales activity exhibits a decrease for the fifth consecutive survey from 52 to
49 per cent, indicating a contraction in the level of sales activity (> 50 means expansion in
activity, < 50 means contraction).
• The complexity and restrictiveness of rental market legislation was cited as the primary
factor influencing the number of BTL properties coming onto the market (34 per nationally
and 53 per cent for Dublin-based respondents).
SECTION A: EXPECTED DIRECTION OF PRICE CHANGE
In contrast to previous surveys, the share of participants expecting national house prices to increase has
declined across the medium-to-long term horizons (+1 Year and +3 Year). The share anticipating
national house price growth over the one-year horizon has declined to 78 per cent compared to 96 percent in the previous survey results (Chart 1). For Dublin, this trend is more pronounced with the share
declining from 98 to 55 per cent (Chart 2). Respondent’s views are less uniform when considering
expectations for price developments in their respective regions, as while approximately 20 per cent of
respondents expect decreases in Dublin, almost all expect prices to rise or remain unchanged in the
provinces. The respondents net increase rate (the proportion of respondents who anticipate a price
increase minus the proportion of those who expect a price decrease) has fallen below 80 per cent for
both national and Dublin markets for first time since early 2016 (Charts 3 and 4). For Dublin in
particular, there appears to be a stronger inclination amongst survey respondents that prices will
decrease compared to the national market (44 per cent for +3 Years compared to 75 per cent nationally).
Chart 1: Expected movement of residential property Chart 2: Expected movement of residential property prices
prices over a 1 Year time horizon: 2018Q2 over a 3 Year time horizon: 2018Q2
100 100 100 100
90 90 90 90
80 80 80 80
70 70 70 70
share of respomdents (% )
share of respomdents (% )
share of respomdents (% )
share of respondents (% )
60 60 60 60
50 50 50 50
40 40 40 40
30 30 30 30
20 20 20 20
10 10 10 10
0 0 0 0
increase no change decrease increase no change decrease
Note: Number of observations for each region included in brackets. Note: Number of observations for each region included in brackets
Chart 3: Net share of respondents expecting property Chart 4: Net share of respondents expecting property
prices to rise over selected time horizons (National): prices to rise over selected time horizons (Dublin):
2014Q4 to 2018Q2 2014Q4 to 2018Q2
100 100 100 100
90 90 90 90
80 80 80 80
70 70 70 70
per cent of respondents
per cent of respondents
per cent of respondents
per cent of respondents
60 60 60 60
50 50 50 50
40 40 40 40
30 30 30 30
20 20 20 20
10 10 10 10
0 0 0 0
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q2
2014Q4
2015Q1
2015Q2
2015Q3
2015Q4
2016Q1
2016Q2
2016Q3
2016Q4
2017Q1
2017Q2
2017Q3
2017Q4
2018Q2
+1 Quarter +1 Year +3 Years +1 Quarter +1 Year +3 Years
Note: Chart provides details of the results from the past 14 surveys (2014Q4 to Note: Chart provides details of the results from past 14 surveys (2014Q4 to
2018Q2). 2018Q1 survey did not occur. Number of observations vary from 2018Q2). 2018Q1 survey did not occur. Number of observations vary from
survey to survey. Net share data can range from -100 to +100. 0% net share survey to survey. Net share data can range from -100 to +100. 0% net share
indicates that an equal number of respondents expect a rise compared to those indicates that an equal number of respondents expect a rise compared to those that
that expect a decline. expect a decline.SECTION B: EXPECTED DIRECTION OF PRICE CHANGE
The median degree of expected national house price appreciation has eased across all time horizons.
The +1 Year anticipated national change has slowed from 8 per cent to 5 per cent (Chart 5), with a
larger moderation for Dublin from 7 per cent to 2 per cent (Chart 6). Nationally, the +3 Year expectation
has dropped back from 14 to 8 per cent. Expectations for Dublin over the +3 Years have more than
halved from 15 per cent to 6 per cent.1
The perceived decline in the anticipated rate of price change reflects similar trends in both the Daft.ie
and MyHome.ie 2018Q2 property reports. The Daft.ie survey of over 1,000 market participants reports
the expected change in house prices nationally over the coming 12 months to be 5.3 per cent, down
from 5.7 per cent a year ago. In Dublin, the anticipated rate has declined from 8.4 per cent to 6.7 per
cent over the same period. In the 2018Q2 MyHome.ie Property Report, they find that the annual rate of
asking price inflation has fallen to 7.2 per cent, its slowest pace since late 2016, down from 9.5 per cent
the previous quarter. They also see evidence of a slowdown in asking price inflation for Dublin as
figures have fallen to 6.8 per cent from 11 per cent in 2017Q4. They state that the slowdown is more
pronounced in relation to expensive areas and high-end property types. It remains to be seen whether
this apparent moderation in residential property price inflation will become evident in actual house
prices when these data are released by the CSO in the months ahead.
Chart 5: Median expected change in National residential Chart 6: Median expected change in Dublin residential
property prices over a 1 Quarter, 1 Year, and 3 Year time property prices over a 1 Quarter, 1 Year, and 3 Year time
horizon horizon
20 20 20 20
18 18 18 18
16 16 16 16
median anticipated change (% )
median anticipated change (% )
median anticipated change (% )
median anticipated change (% )
14 14 14 14
12 12 12 12
10 10 10 10
8 8 8 8
6 6 6 6
4 4 4 4
2 2 2 2
0 0 0 0
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q2
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q2
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q2
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q2
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q2
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q2
+1Quarter +1Year +3Years +1Quarter +1Year +3Years
time horizon time horizon
Note: Chart provides details of the results from the past 15 surveys (2014Q3 to Note: Chart provides details of the results from the past 15 surveys (2014Q3 to
2017Q4). Number of observations vary from survey to survey. 2018Q1 survey 2017Q4). Number of observations vary from survey to survey. 2018Q1 survey did
did not occur not occur
1While there has been a decline in median values, the range of expected price changes varies amongst responses. The national level recorded
a median expected change of 8 per cent for +3 Years with values of 0 and 15 per cent at the 10th and 90th percentiles respectively. Dublin
achieved a median value of 6 per cent with responses varying between -6.5 per cent and 17.5 per cent at the 10th and 90th percentiles
respectively.SECTION C: FACTORS UNDERLYING HOUSE PRICE EXPECTATIONS
There has been a change in the primary factors considered to influence expectations surrounding house
price developments this quarter. The availability of bank credit has been cited as the number-one ranked
factor by 30 per cent of respondents (Chart 7), up from 8 per cent in the 2017Q4 survey. In previous
surveys, the availability of housing units (both second-hand and new) would have comprised greater
than 50 per cent of responses when combined, but this share has now fallen to 34 per cent (Chart 8).
For the 2018Q2 survey, there now appears to be a more even distribution amongst the factors at the
national level as performance of the Irish economy and a collection of ‘Other’ issue each recorded 18
per cent of responses. For the respondents who expect a decrease in prices in Dublin, the main
influencing factor underlying their expectation was the availability in bank credit. The respondents
who anticipate an increase in Dublin prices continue in the main to cite availability of stock (new and
second hand) as the main factor driving their expectation with the availability of credit also featuring
highly amongst positive responses.
Looking at trends in the Dublin and Non-Dublin markets, the availability of credit is the primary factor
for all provinces with the exception of Connacht (Chart 9). The availability of new housing units is
considered a more pressing issue compared to the availability of second-hand stock. In Dublin, ‘Other’
issues (24 per cent) were selected as the second most prevalent condition with the level of interest rates,
perception of value, and level of taxation/fiscal policy all included under this heading. For Non-Dublin
areas, the availability of bank credit was selected by 27 per cent of respondents.
Chart 8: Primary factor influencing expectations of house
Chart 7: Top 3 factors influencing expectations of price developments (National, Dublin, and Non-Dublin):
house price developments: 2018Q2 2017Q1 – 2018Q2
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
70 70
2017Q1
2017Q2
NATIONAL
60 60 2017Q3
2017Q4
share of respondents
2018Q2
share of respondentse
50 50
2017Q1
40 40 2017Q2
DUBLIN
2017Q3
2017Q4
30 30 2018Q2
20 20 2017Q1
NON-DUBLIN
2017Q2
2017Q3
10 10
2017Q4
2018Q2
0 0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
2nd hand stock Cons. new units Bank credit Macropru. rules Economy Other
1st Factor 2nd Factor 3rd Factor
Note: Chart based on 155 observations from 54 respondents. Note: Chart provides details of the results from the past 10 surveys (2015Q4 to
2018Q2). Number of observations vary from survey to survey. 2018Q1 survey
did not occurChart 9: Number 1 ranked factor influencing
regional expectations of house price
developments): 2018Q2
100 100
90 90
80 80
70 70
per cent of respondents
per cent of respondents
60 60
50 50
40 40
30 30
20 20
10 10
0 0
National Dublin (19) Non-Dublin Leinster Munster Connacht Ulster (5)
(52) (39) (15) (15) (7)
Bank credit Other Cons. new units Economy 2nd hand stock Macropru. rules
Note: Number of observations for each region included in brackets. “Other” includes; value,
rental market developments, FX movements and interest rates
SECTION D: ACTIVITY LEVEL vs. PREVIOUS QUARTER
In order to communicate the level of market activity across the sector, a sales activity index (SAI) 2 is
constructed. This is a composite index that applies differing weightings on the typical stage of the sales
process, i.e. instructions, enquiries, agreed, and completions. Higher weighting applied to the final
stages of the sale process in order to reflect the importance of sales completed to the market compared
to sales instructions. Respondents are asked to state their level of activity relative to the previous quarter
in each of the aforementioned categories on a 1 to 5 scale ranging from far less activity to far more
activity. A value above 50 signifies an expansion of activity. Chart 12 shows a composite index for all
four sales processes, while Chart 13 exhibits the index for sales completed in isolation. The latest data
exhibit a slowdown in perceived activity at the national level for the fifth consecutive survey with the
index declining from 52 to 49 per cent suggesting contraction in the market. The SAI for Non-Dublin
regions mirrors the national trend by dropping below the 50 threshold. In Dublin, the index has
increased to 62 driven by growth in the sales agreed and completed categories.
Chart 12: Q-on-Q Index of residential market Chart 13: Q-on-Q Index of residential market sales activity:
Sales Activity (instructions, enquiries, agreed, Sales Completed3 (sales completed)
completed)
80 80 100 100
90 90
70 70
80 80
70 70
60 60
60 60
Index
Index
Index
Index
50 50 50 50
40 40
40 40
30 30
20 20
30 30
10 10
20 20 0 0
15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q2 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q2
National Dublin Non-Dublin National Dublin Non-Dublin
Note: Values of 50 signify no change in sales activity on the previous month. Note: Values of 50 signify no change in sales activity on the previous month.
Values above 50 signify an expansion of activity, while those below 50 signify a Values above 50 signify an expansion of activity, while those below 50 signify a
contraction. Chart provides details of the results from the past 14 surveys (2014Q4 contraction. Chart provides details of the results from the past 14 surveys (2014Q4
to 2018Q2). Number of observations vary from survey to survey. to 2018Q2). Number of observations vary from survey to survey.
2Weightings which sum to 100 are assigned as such: Instructions – 15, Enquiries – 20, Agreed – 30, Completions - 35.
3Sales Completed is one of four categories of activity for which respondents are asked to report their level of activity relative to the previous
quarter.SECTION D: FACTORS INFLUENCING BTL PROPERTIES FOR SALE
The complexity and restrictiveness of rent legislation is a key driver of residential investment units onto
the market, according to respondents. This response was received from 34 per cent on a national basis,
and 53 per cent for Dublin. The second highest factor at both the national and Dublin levels was BTL
property owners coming out of negative equity and electing to sell. This development is reflective of
trends observed in the 2017 RTB Annual Report as while the number of single tenancy landlords is
marginally declining, they report a small spike in landlords managing between 10 and 20 properties,
which could indicate that more large-scale, professional landlords are entering the sector.
Recent CSO data also highlights a growth in the volume of transactions between households and non-
households (i.e REIT’s, pension funds etc) from 1.8 per cent of total transactions in 2010 to 6.4 per cent
in 2017. The figures are more pronounced for apartments with a rise from 4.2 per cent, to 11.9 per cent
of transaction volumes.
Chart 14: Primary factor influencing the number Chart 15: Primary factor influencing the number of BTL
of BTL properties coming onto the market properties coming onto the market (National and Dublin): 2017Q1-
(National and Dublin): 2018Q2 2018Q2
60 50
2017Q1
45
2017Q2
NATIONAL
50
40
2017Q3
35 2017Q4
40
per cent of respondents
per cent of respondents
30 2018Q2
30 25
2017Q1
20
20 2017Q2
15
2017Q3
DUBLIM
10
10 2017Q4
5
2018Q2
0 0
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Rent Negative Pressure Low rental Other
legislation Equity to sell return
Negative Equity Rent legislation Pressure to sell Low rental return Other
National Dublin
Note: Chart based on 145 observations for the national level and 51 responses for Note: Number of responses varies across surveys
Dublin.APPENDIX
Chart A1: Regional distribution of respondents Chart A2: Number of residential units sold in the 2018Q2
30
Dublin (16) small (lhs)
25
Munster
(14)
number of respondents
medium (lhs)
number of respondents
20
Leinster
(13)
15
Connacht
(5) large (lhs)
10
Ulster (2)
5
>1 Region
0
(4) 0 1 to 5 6 to 11 to 16 to 21 to 31 to 51 to 76 to Over
10 15 20 30 50 75 100 100
0 5 10 15 20 25 30 35
per cent of respondents
number of properties sold
Note: Chart based on 54 full or partial responses Note: Chart based on responses from 51 respondents who gave details of their
levels of sales.
Chart A3: Extent of expected 1 Year change in Chart A4: Extent of expected 3 Year change in residential
residential property prices: National and Dublin property prices: National and Dublin
45 45 45 45
40 40 40 40
35 35 35 35
share of respondents (% )
share of respondents (% )
share of respondents (% )
share of respondents (% )
30 30 30 30
25 25 25 25
20 20 20 20
15 15 15 15
10 10 10 10
5 5 5 5
0 0 0 0
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
20
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
16
18
20
National Dublin National Dublin
extent of expected house price change (%) extent of expected house price change (%)
Note: Chart based on 47 and 16 responses to the question on national and Dublin Note: Chart based on 47 and 16 responses to the question on national and Dublin
expectations respectively expectations respectivelyChart A5: Expected movement of residential Chart A6: Expected movement of residential property prices
property prices (National): 2014Q4 to 2018Q2 (Dublin): 2014Q4 to 2018Q2
2014Q4 2014Q4
2015Q3 2015Q3
+3 years
+3 years
2016Q2 2016Q2
2017Q1 2017Q1
2017Q4 2017Q4
2018Q2 2018Q2
2014Q4 2014Q4
2015Q3 2015Q3
+1 year
+1 year
2016Q2 2016Q2
2017Q1 2017Q1
2017Q4 2017Q4
2018Q2 2018Q2
2014Q4 2014Q4
+1 Qrtr.
2015Q3
2015Q3
+1 Qrtr.
2016Q2
2016Q2
2017Q1
2017Q1
2017Q4
2018Q2 2017Q4
2018Q2
2014Q4
2014Q4
Current Qrtr
Current Qrtr
2015Q3
2015Q3
2016Q2
2016Q2
2017Q1
2017Q1
2017Q4
2018Q2 2017Q4
2018Q2
0 10 20 30 40 50 60 70 80 90 100
0 10 20 30 40 50 60 70 80 90 100
Increase Unchanged Decrease Increase Unchanged Decrease
share of respondents (% ) share of respondents (% )
Note: Chart provides details of the results from the past 14 surveys (2014Q4 to Note: Chart provides details of the results from past 14 surveys (2014Q4 to
2018Q2). Number of observations vary from survey to survey. 2018Q2). Number of observations vary from survey to survey.Methodology
Response Rate
The 2018Q2 Central Bank of Ireland/Society of Chartered Surveyors Ireland Survey of Property
Professionals was conducted in June 2018. The survey received 54 full or partial responses, in
comparison to 103 in 2017Q4 and 50 in 2017Q2.
Questions
1. How do you perceive/anticipate national residential property prices to have changed/change in:
a) The previous quarter
b) The forthcoming quarter
c) One year ahead
d) Three years ahead
(Increase/ No Change/ Decrease; Range)
2. How do you perceive/anticipate residential property prices in your region to have
changed/change in:
a) The previous quarter
b) The forthcoming quarter
c) One year ahead
d) Three years ahead
(Increase/ No Change/ Decrease; Range)
3. What are the three main factors influencing your expectations of house price developments?
Availability of 2nd hand stock,
Availability of bank credit,
Central Bank macroprudential rules, Changes in demographics/population,
Construction of new residential units, Foreign exchange rate movements,
Performance of the economy,
Perception of value,
Level of interest rates,
Level of taxation / fiscal policy,
Other,
Media coverage,
Rental market developments
4. Approximately, how many residential properties has your firm sold in 2018Q2?
Range
5. Compared to the previous quarter, how would you describe the following aspects of your firm's
residential property related sales activity in the current quarter?
Instructions, Enquiries, Agreements, Completions; Range
6. What are the three main factors why residential investment units are coming onto the market?
Landlords coming out of negative equity,
Net rental returns too low,
Rent legislation is too complex and restrictive,
Not enough rental demand,
Pressure from lending institutions to liquidate assetsYou can also read
