Pictured at the launch of the SCSI Annual Residential Property Review & Outlook 2014 Report (L-R): Simon Stokes (SCSI Residential Agency Chair), Micheál O’Connor (SCSI President) & John Moran (Secretary General, Department of Finance)
2013 – The year of the property recovery
2014 – Prices to rise but challenges remain, especially in regions
Annual residential property survey from Society of Chartered Surveyors Ireland – main findings;
- Agents see increase in volume of sales and sales instructions
- Sales prices grow across all regions in 2013
- In Dublin, prices estimated to be up 15.7%
- Rest of the country prices estimated to be up 5.7%
- In Munster prices estimated to be up 8.1%
- In Leinster its 4.6% and Connacht/Ulster its 3.9%
- Majority of agents said supply of properties had either remained the same or decreased during the year
- Average rental prices in Dublin twice those outside the capital
- Urban-led recovery will lead to increase in house and rental prices in 2014
- Buy to let investors back in the market, especially in Dublin
Wednesday 22nd January 2014. Property prices increased across all regions as did the volume of property sales and sales instructions in 2013 according to the annual residential property report of the Society of Chartered Surveyors Ireland.
According to a survey of 400 estate agents for the report, prices in Dublin are estimated to have risen by 15.7% in 2013.
While the recovery in Dublin has been broadly recognised, the SCSI survey suggests that prices grew in all regions and in almost all categories last year, with prices estimated to have risen by 5.7% outside the capital, albeit that they were coming from a very low base.
Its estimated prices increased by an average of 8.1% in Munster, 4.6% in Leinster and went up 3.9% in Connacht/Ulster. The report was compiled by Amarách Research for the SCSI.
Dermot O’Leary, Chief Economist with Goodbody Stockbrokers said 2013 will go down as the year of the recovery in residential property prices but he pointed out that given the level of cash transactions, it was largely a credit-less recovery.
“Renewed consumer confidence has been a key trigger for the recovery and it’s interesting to note that many agents referred to positive media reports playing a big role. They are also saying that mortgage finance became more available during the year and this provides some room for optimism” Mr O’Leary said.
The key issue in 2014 according to the economist will be supply and he warned that it would be naive to think that the market will cure all its own ills.
“While development financing is available for house building this survey suggests there is a 35 to 40% equity gap and we cannot or should not expect banks to shoulder all that risk. The construction sector should try to tap into the interest which exists for investment in Ireland to fill that gap” he said.
But Mr O’Leary urged the banks to provide more options for people in negative equity or with tracker mortgages as this would free up the market overall.
“We must remember that despite the falls, prices still cannot be described as ‘cheap’ in general and the Government must make the right policy choices around financing, development and planning to avoid a repeat of the past” he concluded.
Simon Stokes, Chair of the Residential Group of the SCSI said the property picture was very much a case of an urban led stabalisation and recovery with the regions languishing behind.
While the majority of agents were forecasting possible further price increases in urban areas due to a lack of stock and improvements in sentiment in 2014, future policy needed to take account of the different factors driving demand across the regions in what has become a multi-tiered market.
“In Dublin and parts of Cork, supply is the key driver of increasing prices, but in Munster it’s availability of finance while in Leinster it’s greater consumer confidence.
The lack of movement in the property market means fewer second hand family homes are coming on the market together with the absence of new house and apartment building is having a big impact on the property markets, especially in cities.
But even within cities the picture is not straightforward with parts of Dublin like the city centre, South Dublin, Fingal and Dun Laoghaire recording double digit growth while others remain flat ”Mr Stokes said.
The Government and local authorities need to be aware of these issues as a one fits all approach to property will not work when you have a number of micro markets with different needs. Despite the demand, it is still not economically viable to build new houses in certain areas due to high development costs in addition to, planning density restrictions and development levies and other charges”.
He said it was interesting to see that investors are once again active in the market, especially in Dublin.
“Investors are seeking to take advantage of lower apartment prices and rising rents. Most of the interest is from buy to let investors and an increasing trend in 2013 was the number of international investors purchasing multi-unit or multi-family investments. While this is a positive development, as outlined above a number of challenges remain on the horizon before a properly functioning property market can be realised” Mr Stokes said.
According to agents residential rents in Dublin vary from €878 per month for a 1 bed apartment to over €1,700 for a 4 bed semi-detached house. Outside Dublin the respective rents vary from €450 to around €800, approximately half the prices charged in the capital.
Simon Stokes said most agents expect rental prices to rise in 2014.
“More people are looking at long term renting as a life choice while increased housing standards means that pre 1963 stock has generally been taken out of the system and not been replaced. These factors are putting further pressure on supply” Mr Stokes said.
Note to Editor
This report, which was compiled by Amárach Research is based on the views, perceptions and opinions of property professionals. The figures quoted are based on a survey of 400 agents who are SCSI members and from other relevant property reports. As well as collating the findings, Amárach Research conducted in-depth interviews with the regional Chairs of the SCSI and also with leading industry experts. The introduction to the report was written by Dermot O’Leary, Chief Economist with Goodbody Stockbrokers.
The full report is available at www.scsi.ie
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