House price inflation should remain strong in 2017 despite the likely abolition of the ‘Help-to-Buy’ scheme according to the latest property report from MyHome.ie in association with Davy.
The mix-adjusted price on newly listed properties nationally rose by 5% in Q2 up 8.9% on the year. In Dublin prices rose by 2.8% and are up 10.3% year on year. Newly listed properties are seen as the most reliable indicator of future price movements.
The mix adjusted asking price for new sales nationally is now €251,500, an increase of over €24,000 in the last six months. The corresponding figure for Dublin is €360,000 an increase of €32,000.
For the entire stock of properties listed for sale on the website prices rose 2.8% nationally and 3.2% in Dublin. The national mix adjusted figure is now €224,500K while in Dublin its €313,500.
The author of the report, Conall MacCoille, Chief Economist at Davy, said house price inflation should remain strong despite the likely abolition of the ‘Help-to-Buy’ scheme in the upcoming Budget. While acknowledging that 5% was another sharp increase he pointed out that prices do tend to fall back after the busy summer.
"The outlook for Irish house price inflation will be primarily driven by robust jobs growth, rising incomes and competition among homebuyers, leading to more highly leveraged mortgage lending. The likely demise of ‘Help-to-Buy’ could lead to a rush of transactions in 2017 as first-time buyers move quickly to avail of the scheme and to a slowdown in 2018 as it is phased out. Nonetheless, the bigger picture is that Irish house price inflation should remain robust, driven by the recovering economy.”
MacCoille believes that ‘Help-to-Buy’ has had a significant impact on the housing market.
"The 1,679 ‘Help-to-Buy’ claims approved to date have cost €24.5m. This means that the average ‘Help-to-Buy’ cash rebate has equalled €15,000, or 5% of a €300K newly built home. Given the 7,275 applications received so far, the initial estimate that the scheme would cost €50m may now seem conservative.”
"Did ‘Help-to-Buy’ contribute to house price inflation? What evidence there is suggests it did, as the price of newly built homes is rising much faster than existing dwellings. Of course we have also seen a pickup in lending – in Q1 the average mortgage loan to first time buyers rose by 9.5% to €194K – and this must in part reflect the relaxation by the Central Bank of mortgage lending rules late last year.
The Managing Director of MyHome.ie Angela Keegan said the continuing tightness of the housing supply situation means houses are being snapped up ever more quickly by desperate buyers and that competition for properties will intensify through 2017.
"There were only 21,000 homes listed for sale on MyHome in Q2, down over 11% on the year. This means that just 1% of Ireland’s housing stock of two million homes is currently listed for sale. In Dublin where demand is greatest, fewer than 4,000 homes or 0.85% of the capital’s stock is listed for sale.”
"Not surprisingly average time to sale agreed for homes has fallen to 3.8 months nationally and just 2.7 months in Dublin. These are the lowest times we’ve seen since we began recording these figures in 2011.”
Sales of €1m homes
A new feature in the Q2 report was an analysis of the sales of homes exceeding €1m. Last year there were 638 such transactions, four times greater than the 160 recorded in 2011. Not surprisingly 547 of these €1m transactions were in Dublin, with Cork recording 21, Wicklow 18 and Galway 12.
Within Dublin, the vast majority of the homes sold for €1m, were on the south side with Dublin 4 (136) accounting for 20% of the national total. Dublin 6 comprising Rathmines, Ranelagh and Rathgar – had 100 transactions, Dublin 18 which includes the Foxrock area had 44, Blackrock had 39, Dalkey and Killiney had 36 and Dublin 14 had 28.
North County Dublin saw 20 transactions exceeding €1m in areas such as Howth, Malahide and Kinsealy. Clontarf also had 9 such sales. MyHome currently has 545 listings for sale with an asking price exceeding €1m. In addition 221 properties exceeding €1m have recently had agreed sales.