REA

Property Reports

REA House Price Predictions 201709 January 2017

First-time buyers, encouraged by the easing of the Central Bank’s restrictions on mortgage deposit lending, will drive a continued rise in house prices throughout 2017, estate agents have predicted.

A survey carried out for the Irish Independent by the Real Estate Alliance Group has found that agents throughout the country expect prices to rise by 6.1% on average in 2017.

And after a bumpy year for the Dublin market, agents in the capital are predicting that house price rises will outstrip the national average and grow by 6.8% over the next 12 months.

Rising rents, a lack of suitable supply and the punitive mortgage deposit rules for first and second time buyers had combined to put the Dublin property market into reverse throughout the opening months of 2016.

However, an increase in mortgage-approved buyers and the recent easing of the Central Bank’s deposit restrictions has seen first-time buyers return to viewings.

This, combined with a shortage of suitable supply, has caused prices to appreciate, and REA agents in the capital are predicting that the outlook is bright for the new year, at least in the lower end of the market.

However, there is less appreciation anticipated in the upper ends of the family home scale as serious issues around the income multiplier and the deposit rates put the brakes on many second-time buyers trading up.

Agents in the three main cities outside Dublin are optimistic about 2017, with rises of 10% predicted in Limerick and Galway, with Cork looking at a more modest 5% increase with agents in the latter two areas highlighting a lack of new developments planned for the cities.

The outlook for the commuter areas surrounding the capital is quite cautious, with counties around Dublin predicting a rise of 3.8% on average and many agents fearing that the market has hit its height under the current financial regime.

Agents in Meath are predicting just a 1.8% change next year, with some areas such as Navan and Kells forecasting that there will be no movement in the coming 12 months, thanks to a lack of new development and a shortage of suitable supply.

There was minimal growth in the final quarter of 2016 in Wicklow, however, agents are confident that the market will react positively to a series of significant upcoming new developments adjacent to the N11 including Kilcoole, Rathnew, Arklow and Wicklow Town.

Prices in Kildare were stagnant in the REA’s Q4 Average House Price Survey, and REA are predicting that the Government’s Help To Buy Scheme and the easing of the Central Bank restrictions will combine to produce a 3.5% increase in the coming year.

“The easing of the Central Bank restrictions has given the market great short-term hope, but the real problem in the property lies in supply,” said REA chairman Eamonn Spratt.

“We are bringing people into the market, but we have no long-term plan to provide the suitable housing that they need around the country.

“The fact remains that builders will not create developments unless those properties can be sold for more than €200,000.

“Until that point, unless there is state intervention on supply financing, we will not see sustainable building in areas where the average is below that point.

“It is this realisation that is causing price inflation in towns around the country, with the highest rises of all – an average of 7.4% – being predicted for the sector outside of Dublin, the commuter areas and the major cities.

“Longford, for example, grew by 41% in 2016 and prices are predicted to rise by a further 15% this year.

“However, the price of the average house in Longford town is just €78,000 and will reach €90,000 by the end of 2017 simply because the oversupply on the market has now sold and there are no new developments on the horizon.

“Double digit rises of 10% are also being predicted for the same reason in Roscommon, Monaghan, Cavan, Galway County and Kilkenny.”

The lack of building opportunity could hurt future economic development in lower-priced counties, as the example of Carrick-Shannon in Leitrim shows.

Local agents report that employment is growing in the town and that there will be a shortage of suitable properties through till 2018 at the earliest, with lack of supply predicted to drive a 10% rise in the coming year.

“The average house price is €122,000 and unless houses can sell for €180,000, builders will not make money and start building,” said Joe Brady of REA Brady.

In some areas of the commuter belt, those trading down are now in competition with first-time buyers such as In Ashbourne (+2%) and Drogheda, which is predicting a 7% rise.



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REA Q4 Average House Price Survey26 December 2016

The price of an average house in Dublin rose by 4.2% in the final quarter of the year as first-time buyers returned to viewings in the capital.
The average three-bed semi-detached in Dublin city now costs €389,167, a rise of €15,834 (4.2%) in the last three months and an increase of 8.9% over the past year, the Q4 REA Average House Price Index has found.
The announcement of the upcoming easing of the Central Bank lending restrictions on first-time buyers has had an immediate effect in Dublin, with hopeful buyers suddenly back in evidence at house viewings.
And the survey found it took just five weeks to sell the average house in Dublin City in Q4, a drop of two weeks from Q3.

The REA Average House Price Survey concentrates on the sale price of Ireland's typical stock home, the three-bed semi, giving an up-to-date picture of the property market in towns and cities countrywide to the end of the selling season in December.

There were substantial rises in both South County Dublin (€406,667 up 2.5%) and North County Dublin (€267,500 up 2.9%) as the capital’s property market, which had been falling this time last year, finished with an 8.1% overall annual increase.
However, while the easing of the restriction on first-time buyers deposits has had an impact in the capital, the commuter market experienced a rise of just 1% in Q4 with prices static in commuter towns such as Ashbourne, Blessington, Naas, Maynooth and Celbridge.

And the major cities such as Cork, Limerick and Galway followed much the same pattern in Q4, returning an increase of 1.1% over the last three months, with prices static in Cork City at €295,000 – a rise of just €10,000 (3.5%) on the December 2015 figure.

The average semi-detached house nationally now costs €202,926, the Q4 REA Average House Price Survey has found – a rise of 1.4% on the Q3 figure of €200,148.
The biggest percentage increases over the past year came in the country’s smaller rural towns situated outside of Dublin, the commuter belt and the major cities.
Prices here rose by an average of 12.3% over the year, with a three-bed semi now costing €134,290 – an increase of 2.4% in the past three months.

While the easing of the Central Bank deposit restrictions has had a positive effect on the market, the lack of suitable supply is the biggest influence nationwide, according to REA Chairman Eamonn Spratt.
“In many lower-priced towns, a previous oversupply has now worked its way out of the market, and buyers are realising that there will be no new developments as it is still uneconomical for builders to start new-builds,” said Mr Spratt.
“For that reason Longford, which is the most affordable county in the country, has seen its three-bed semi price rise by a massive 41.8% over the past 12 months – going from €55,000 last December to its present price of €78,000.

“Similarly, investors in property in Roscommon would have seen their values rise by 28.6% over the past year, with agents reporting that Q4 rises of 8% in Roscommon town are fuelled by buyers realising that there will be no further building in the area in the short term.”
After seeing the biggest growth in the country over the past few years, counties in the commuter belt have seen their progress slow or stagnate over the past three months with Meath (1%), Kildare (0%) and Wicklow (0.8%) all starkly contrasting with the growth in the Dublin market.
“Our agents are reporting that the income multiplier restrictions are having the greatest effect in commuter counties, and couples earning €60,000, for example, cannot now afford to purchase suitable homes due to lack of supply,” said Eamonn Spratt.
“There is a cap with the multiplier of 3.5 times income beyond which many couples cannot go, and while there is plenty of activity, in some commuter towns prices are probably as high as they can go under the current regulations.
“However, some of those same commuter towns nearer Dublin are beginning to see new builds commencing which shows that developers are confident that if they build units, they will sell above the profitability cut-off floor of around €200,000.”
The average time taken to buy a house dropped from six to five weeks in Q4, with both Dublin city and county and the country’s large regional towns experiencing shorter sale times.
There was also an increase of mortgage-financed buyers nationwide with cash buyers making up just 32% of sales around the country – down from 40% at the end of 2015.
In Dublin, just 25% of sales are now to cash buyers, while the figure in the commuter counties is lower again at 21%.
Barry McDonald of REA McDonald in Lucan thinks it will be the New Year before we see the full impact of the lifting of the Central Bank restrictions and the Government’s Help To Buy scheme.
“First-time buyers are definitely the main cohort out in the market in Dublin – most obviously in the €250,000 to €300,000 price bracket which is moving very well,” he said.
“However, as you move up the price range to the €400,000-plus market, buyers are thinner on the ground.
“This is a side-effect of the continued 20% deposit restrictions placed upon second-time buyers, who cannot afford to trade up in the market, thus freeing up suitable starter homes.

“We are also seeing vendors thinking that they may do better in the new year and holding off before coming to market.
‘The market is very definitely being driven by supply and not demand. The typical scenario now is that there are between one and three bidders for a property rather than five or more and buyers are finding that if they miss out, there is not necessarily an equivalent property out there.”

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Media information: Darren Hughes, MediaConsult, darren@mediaconsult.ie, 086 293 7037
Available for interview: Eamonn Spratt, Chairman REA, 086 253 1277





Q3 Average House Price Survey Sept 201626 September 2016


The average three-bed semi has risen above €200,000 for the first time since the country emerged from the property crash, according to a national survey carried out by Real Estate Alliance.

And with an increase of mortgage-backed buyers on the market chasing a limited supply, prices in Dublin have grown by +2.75% – almost double that of the previous three months.

The REA Average House Price Survey concentrates on the actual sale price of Ireland's typical stock home, the three-bed semi, giving an up-to-date picture of the property market in towns and cities countrywide to the end of Q3 this week.

The average three bed semi nationally now costs €200,093, an increase of €4,732 (+2.42%) since the end of June. This is a rise of 6.37% against the same time last year.

Prices in Dublin city grew by +2.75% to €373,333 since June – almost twice the growth experienced in the same area in Q2 as buyers chase a scarce supply of suitable housing.

In Dublin, one agent, Ed Dempsey in Clonskeagh, is reporting increases of €25,000 for sale prices over the past three months, with the average three-bed semi increasing by 5.49% from €455,000 in June to €480,000 now – a rise of 9.09% year-on-year.

Other Southside Dublin agents are reporting that the autumn market is stronger than Q2, with the lower and middle ends of the market beginning to move due to a release of pent-up demand.

Prices in the tier containing commuter counties and the main cities of Cork and Galway have risen by an average of just under €3,000 to €217,176 (+1.21%) while those in the rest of the country have increased by nearly €5,000 to €133,268 (+3.55%).

“We are seeing little or no increase in supply nationally, with an increase in funded buyers fueling the market in the short-term,” said REA Chairman Michael O’Connor.

“Many of our agents are now reporting some buyers are returning to the market having achieved a level of savings, and that there is an increase in mortgage-funded purchases.

“The average amount of cash buyers has fallen by 3% to 33% nationwide, but in Dublin city that figure is down by 7% in three months, with 72% of transactions now mortgage-funded.

“The early effects of the Central Bank restrictions had previously seen prices drop in the capital in the year to Q1 2016, but a combination of a longer time period to save and pressure on supply is manifesting itself in price growth.

“Our agents are also reporting that many first-time buyers seem to be holding fire in the hope of increased incentives in the upcoming budget.”

“The Central Bank’s mortgage deposit rules are still being keenly felt in the commuter areas, with most rises occurring in towns where three-bed semis are available for under the deposit threshold of €220,000

The immediate aftermath of the Brexit vote has had an effect in the north west where Donegal is the only county to register a three-month fall on -1.73%.

This has been most keenly felt in traditional holiday home spots such as Bundoran where the average three-bed semi has dropped by -3.41% in three months from 88,000 to 85,000.


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Available for interview:
Michael O’Connor, REA chairman and auctioneer.
087 259 7034 michael@reaoconnormurphy.ie

Media information: Darren Hughes, 086 293 7037, Darren@mediaconsult.ie