As housing supply continues to decline, average time to sale agreed has fallen to just four months, according to the property report from MyHome in association with Davy.
The report says that Brexit may dampen medium term expectations but the UK’s decision to leave the European Union is not expected to have material impact on the Irish housing market in 2016.
It also says that while the sharp gains in asking prices mainly reflect the recovery in house prices across the country with newly listed properties in Dublin rising by a more modest amount this is still four times the 0.9% increase recorded in the capital in the first quarter of the year.
The mix adjusted asking price for new sales nationally is now €231,000 and €326,000 in Dublin, an increase of €11,000 for both markets compared with the first quarter of the year.
For the entire stock of properties listed for sale on the MyHome website the national mix adjusted figure is €213,000, up 2.5%, the biggest quarterly increase since the third quarter of 2006. In Dublin the figure is €296,000, up 2%, which brings it back above the level seen in the second quarter of 2011.
The author of the report, Conall MacCoille, chief economist at Davy, said the supply shortage and wage inflation were the key factors underpinning the latest price surge and pointed out that the number of homes for sale is down 6.7% on last year to 23,520, which is close to historical lows.
‘Not surprisingly properties are selling increasingly quickly with the average ‘sale agreed’ time falling to just four months, a new low. Outside of Dublin it has fallen to 4.8 months, the first time it has fallen below five since the financial crisis of 2008. While the government has outlined ambitious housing plans, there is no prospect of the shortage of housing supply being alleviated by new construction in the near term,’ he explained.
‘At the same time, home buyers are feeling the heat and reacting to the lack of supply by taking out ever higher mortgage debts, helped by rising wages and growing consumer confidence. In May the average mortgage approval for house purchase rose to €208,000, the first time that the average mortgage approval has exceeded €200,000 since the series began in 2011,’ he added.
MacCoille believes that overall the data points to sharp gains in Irish house prices through the remainder of 2016. ‘While the potential impact of Brexit remains something of a wild card, its overall impact on the Irish economy and broader fears regarding the health of the European economy could help to temper medium term expectations for house price growth,’ he said.
‘However that probably won’t emerge until the turn of the year and that is why we believe that the near term impact will be marginal,’ MacCoille added.
Angela Keegan, managing director of MyHome, said sharp price gains outside of Dublin, particularly in Galway and Cork, showed the recovery was now gaining real traction around the country. However she said the low level of transactions remained a concern.
She pointed out that Galway was a standout performer in the second quarter with median asking prices in the city rising by 11% to a fresh high of €226,000, while prices in the county rose by 5.7% to €185,000.
In Cork the median asking price rose by 7.5% to a fresh high of €215,000 while in the city there was a 6.7% gain to €230,000. Many counties are now seeing high double digit annual gains in the price of three bed and four bed houses in the range of 10% to 20% while the median asking price of a four bed semi rose in 19 of the 26 counties.
‘While there is an underlying rise in the number of transactions 2016 looks set to see the slowest growth in many years. If they expand at all the growth rate will probably be a subdued 5%,’ said Keegan.
‘While the lack of supply is currently supporting price increases it will eventually hold back housing market activity and addressing this issue has to be the government’s number one priority,’ she explained.
‘There has been a 20% increase in completions in the first four months of the year and if that continues total completions for 2016 will be 15,200. While this is an improvement, it is still well short of the 25,000 we will require on an annual basis for the foreseeable future,’ she added.
