The good and the bad in the market currently

Ronan Lyons, Economist

11th Apr 2016

Ronan Lyons, Daft's in-house economist, commenting on the latest Daft research on the Irish property market.

Perhaps the most remarkable feature of the Irish housing market over the last couple of years has been the dramatic start and end of house price inflation in Dublin. Starting in 2013, house price inflation reappeared in the capital, after an absence of six years and within 18 months, prices had risen by over 40% on average – and almost 50% in some districts.

Least Most Expensive

The introduction of the Central Bank rules, however, has nipped a new housing bubble in the bud and since then prices in Dublin have barely budged, rising 0.9% in the year to March according to the figures in this report. What the Central Bank effectively did was freeze credit conditions the way they were in late 2014 and thus prices are now being driven not by bank lending practices or by expectations, but rather by the more fundamental forces of supply and demand.

The issue in the Irish housing market currently – and in particular in the greater Dublin area – is a lack of homes. Every month, roughly 2,000 new households are formed, each requiring somewhere to live. But each month currently sees the construction of at best 1,000 new homes. In Dublin, the figures are even starker – nearly half of all new households are being formed in or around the capital but only 150 or so properties are being built each month in the city.

The result is that fewer and fewer homes are on the market. And this is a trend that is common to all parts of the country now, not just Dublin, which did not see any significant over-construction during the bubble years. The first graph below shows the total number of properties on the market each month from 2010 on. It is clear from the graph that the tightening of supply in Dublin took place between 2011 and early 2014 and if anything has improved slightly since.

Total number of properties actively for sale, by region, 2010-2016

Elsewhere in the country, however, the trend towards tighter and tighter supply continues, with less than half the number of homes on the market now compared to four years ago. It's worth noting, however, that Dublin has a larger population than any of the other three regions shown in the graph. So, on a per-capita basis, Dublin remains the most starved market: there are just 27 homes for sale for every 10,000 people in Dublin, compared to 62 per 10,000 people elsewhere in the country.

This, therefore, is the unhealthy part of the housing market: a lack of homes for people to buy. It is serious, chronic and getting worse and therefore requires government action. This action should be focused not on trying to trying to drive prices further up, so as to stimulate supply, but rather to drive costs down so that they are in line with our incomes in the same way that the Central Bank now requires house prices to reflect our incomes.

But not everything about the market currently is unhealthy. The second graph below shows the gap between the final transaction price and the initial list price. Unsurprisingly it shows that during 2010, 2011 and 2012, on average the final transaction price was well below the initial list price. During 2013 and 2014, however, the market turned quickly in Dublin and by the time the Central Bank announced it was bringing in mortgage caps, the typical Dublin property was achieving 7% more than its initial list price. Where once there was too little demand, suddenly there was too much.

Comparison of final transaction price to initial list price, 2010-2016

Since then, the relationship between list prices and the sale price has normalised, both in Dublin and elsewhere. This is most definitely a positive feature of today's market as it means decisions to buy and to sell can be made under less pressure. This mix of healthy and unhealthy gives a flavour of the housing market, as Ireland waits for a new Government.

Map of Ireland for Rental

Discuss This Article

  • Re: The Daft House Price Report Q1 2016

    Posted By: Anonymous Poster Date: Monday April 11, 2016 @02:43PM

    There is a mistake in the data published in the Housing Report. I'm fairly sure that the Asking Price Index level for February 2016 should be 122.8, not 112.8.

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  • Re: The Daft House Price Report Q1 2016

    Posted By: Mo Date: Monday April 11, 2016 @09:04PM

    Hi I'm trying to placed my add
    I don't know for some reson is not working please check for me help me resolve this issue

    • Reply to this message
  • Re: The Daft House Price Report Q1 2016

    Posted By: Anonymous Poster Date: Monday April 11, 2016 @09:19PM

    I would love a 1 bedroom house :) anything would do for rent a little house with 1 or 2 rooms in cork city

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  • Re: The Daft House Price Report Q1 2016

    Posted By: Furshin Date: Tuesday April 12, 2016 @10:55AM

    I know that Diblin is the centre of the universe but it would be nice if we culchies could read the figures for our areas. I tried emailing the report to myself but even on my big PC screen I can't read the figures. Disappointing.

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  • Re: The Daft House Price Report Q1 2016

    Posted By: Shrewd Landlord Date: Tuesday April 12, 2016 @03:54PM

    Sure its only figures, what does it matter ? Fill your boots. Rents are going up again boom boom baby

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  • Re: The Daft House Price Report Q1 2016

    Posted By: Anonymous Poster Date: Tuesday April 12, 2016 @11:21PM

    None of the above prices are taking into account that 'some' of the estate agents are selling houses for the asking price, but taking cash as well!!!!....None of this cash is recorded anywhere, those lucky enough to have the cash get the property, the rest of us are left behind.

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  • Re: The Daft House Price Report Q1 2016

    Posted By: BrianRich Date: Wednesday April 13, 2016 @05:54PM

    I think tenants treat the place better when they are paying a higher proportion of their salary on rent. My tenants hand well over 50 percent of their wages to me and generally the place is pretty clean when they hand back the keys. Still have to keep their deposit in most case though as they don't clean up the kitchen, extractor fans, leaving dust on skirting boards etc.
    I run a service and think I should be compensated as an entrepreneur. If the government slashed tax for new builds and helped out landlords a little more we could be pumping more money back into the economy.

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  • Re: The Daft House Price Report Q1 2016

    Posted By: Another Anonymous Poster Date: Wednesday April 13, 2016 @09:04PM

    Average house prices have been fall back by 2.78% in 2015 compare to 2014 in Dublin area.

    Average in 2014: 362452
    Average in 2015: 352361

    These results based on Everyone can double check it.

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  • Re: The Daft House Price Report Q1 2016

    Posted By: George Date: Thursday April 14, 2016 @11:06AM

    The main theme in the media is that the CB regulations are a bad thing and the cause of so much of the mess that is the property market.
    It seems to me that if they government had of done some joined up thinking and lowered VAT rates for building to make it profitable for builders we would now have a proper regulated property market and a supply of new housing hitting the market.

    What is the governments motivation to create the current mess and try to force the had of the CB regulation. Its obvious they do not want a functioning property market.

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  • Re: The Daft House Price Report Q1 2016

    Posted By: T.Zon Date: Friday April 15, 2016 @12:35AM

    I noticed that in Cork county, all of a sudden real estate agents rised prices and then 2 weeks later they dropped 3/4 of the prices again as if they were suddenly cheaper...This way
    they manipulate
    prices! More houses were sold not reaching " the asking prices" according the sold prices register. Very strange and makung very cautious to buy. IMF is warning several countries for pricebubbles again and with the predictions stocks will fall 20/40 % very soon one really should watch out. The ECB is playing dirty tricks making EU citizens believe things are going well in the EU. With a Brexit it's possible the EU will fall apart!!

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  • Re: The Daft House Price Report Q1 2016

    Posted By: Big J Date: Friday April 15, 2016 @10:49PM

    I find it laughable that apparently houses are now achieving list price. I am a first time buyer and since November of 2015 I have been trying to buy a house. Every single house I have looked at has gone for well in excess of the asking price. Just recently I had a bid on a hous at 215k and a mere 3 days later the estate agent called me and said there was numerous other offers and was I still intrested. The current bid was 255k. I found out the house had sold for in excess of 270k. This is not an isolated incident it has happened to us on 6 seperate occasions.

    Simply what this report says and what's actually happening are completely separate worlds.

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  • Re: The Daft House Price Report Q1 2016

    Posted By: Sean Date: Saturday April 16, 2016 @11:36AM

    Estate Agents have many tricks and good luck to the person who tries to outsmart the estate agent, but they let themselves down with general rudeness, attitude problems, poor photography, disgraceful punctuation and grammar in adverts etc etc. They can get away with this because most people don't deal with them very often as its often a one time transaction to buy a house for many people. Others will be concentrating more on lettings in the current non- market. This in an era where their existence as middlemen in house purchases is under threat by technology and a younger generation who have learnt that gorillas don't sell many houses.

    There are many price changing 'stunts' that I have noticed. One is the rise after two weeks or a longer period of time , followed by a sudden 'drastic reduction'. The other one I have noticed is : one day after the house is listed, there will be a small rise. These can' t all be due to accidentally putting in the wrong figure and noticing one or two days later.

    Then there is the property added with a ridiculously low figure. Which makes sense to me, as its inviting multiple bids and a possible higher return.

    'Sale Agreed' houses , I am sceptical of many of these, even if it takes a long time to finalise the deal, it appears to me that it's in the estate agents interest to have a lot of houses sale agreed rather than a whole listing with no activity whatsoever.

    However I don't agree with TZON that this is manipulation of prices- it's selling tactics, and there is nothing really dishonest about it if you compare estate agents with a certain supermarket chain.

    The only tactic that I find a bit questionable is that of taking a house off the market and bringing it back on two years later and the house history data goes 'missing', so that a potential browser will think that the house is 'new to the market' when in fact it is not. It's possible to argue what 'new to the market' means but for me this practice is dishonest and should be incorporated into a register similar to the PPR. It never will be but if you want to encourage people to buy houses, cutting out some of the mystery would help.

    As for the EU and ECB well their cover has been blown since 2008. Nobody believes their GDP figures or inflation figures, which are manipulated much more than an estate agent could ever do.

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  • Re: The Daft House Price Report Q1 2016

    Posted By: Anonymous Poster Date: Sunday April 17, 2016 @06:47PM

    Very interesting. Can you please tell me if this was in
    Dublin? Thank you.

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