[Article] Views differ on house building boom

Victor

http://www.rte.ie/business/2004/0720/houses.html

Views differ on house building boom
July 20, 2004 19:34

The latest Housing Statistics Bulletin shows that new house prices rose by 1% in the first quarter of this year compared with the previous quarter, while Dublin prices were up 2.8%.

Second-hand house prices fell by 1.3% nationally and by 2.7% in Dublin. Housing Minister Noel Ahern said he welcomed indications that house price increases had slowed.

Compared with the same quarter last year, new house prices increased by 11.3% nationally and by 11.8% in Dublin and second-hand house prices increased by 12.6% and 12.3% nationally and in Dublin respectively.

The bulletin also shows that the strong performance in housing activity has continued following last year's record level of house building. There was a 22% increase compared with the same quarter last year, with house completions in the Greater Dublin Area up 18%. Total house completions in the first quarter were 16,721. Yesterday a report from Davy Stockbrokers predicted the figure would hit 80,000 this year, beating last year's 69,000.

The total value of mortgages approvals in the quarter amounted to €4.5 billion - up 31.6% on the first quarter of 2003. The total value of loan payments amounted to €3.3 billion - a 33.1% annual jump.

Auctioneer Sherry Fitzgerald said the findings of the report were 'significantly different' to its own view of market activity in the period in question.

In a statement the firm said: 'The Sherry FitzGerald barometer of second-hand properties revealed that average second-hand properties increased in value by 4.1% and 3.6% in Dublin and Ireland respectively during the first quarter of the year a trend that continued in the second quarter of the year.'

Victor

http://www.timesonline.co.uk/newspaper/0,,2765-1182670,00.html

Dublin double garage goes on sale for €120,000
John Burns

DUBLIN’S booming property market looks like setting another record — a lock-up garage on the city’s southside is being offered for sale for €120,000.
The 330-sq-ft space, room enough for two cars, is not thought to have any planning potential. A neighbour on Warwick Terrace in Ranelagh was refused permission two years ago to develop a similar garage due to the lack of proper pedestrian access.

Sherry FitzGerald, the estate agents, says it has already had inquiries about the double parking-space and is confident it will get close to its target price — the equivalent of €360 a square foot.

“It is currently being used as a builder’s storeroom, with the owners paying commercial rates,” said Colin Smyth, the local agent. “We have had inquiries from people who are considering artists’ studios there.”

With Irish property prices showing no sign of bottoming out despite almost a decade of boom, garages have already edged into six figures. The record stands at about €102,000. A group of 12 in Rathmines sold for €520,000 last year, although they had potential for planning permission.

The auctioneers for the Warwick Terrace lock-up hope that the terrace of eight Victorian houses in front may produce a buyer. One of the houses on Leeson Park was sold last March for €1.3m.

Smyth said: “It is a lot of money for a garage, but it would stand greatly in a property’s favour if they were selling them together. The bonus they would get to their house price would be far greater than the price for this property.”

Three years ago a car park space in Dublin sold for €57,000, or €750 per square foot. Some parking spaces in the city are rented for €4,000 a year. House prices in the capital also continue to break records. Michael Whelan, a Longford builder, recently paid €10m for a Victorian house in Dartry, the equivalent of €3,000 a square foot.

A record 80,000 housing units are expected to be built this year. However, prices will grow by 25% over the next five years, according to a survey of leading property figures and economists conducted by Finance magazine.

Alan McQuaid, the chief economist at Bloxham Stockbrokers, was the most bearish of those surveyed. He predicted increases of just 1.7% over the next five years, with growth of 5.6% in 2004 falling to -0.2% in 2007. He said that the low interest rate environment would ensure that “demand for housing remains robust and that prices stabilise rather than collapse”.

Annette Hughes of DKM Economic Consultants believes housing completions could reach 85,000 this year, although only 15% will be in the Dublin area. “With household formation at 40,000, that leaves a lot of vacant property and potential oversupply particularly around the country.”

Victor

http://home.eircom.net/content/irelandcom/topstories/3634407?view=Eircomnet

Second-hand house prices fall
From:ireland.com
Wednesday, 21st July, 2004

Second-hand house prices fell in the first quarter of the year according to figures released yesterday. However, prices are still up 12.6 per cent on the same period last year.

The quarterly housing statistics bulletin from the Department of the Environment says the average second-hand house cost €274,274 in the three months to the end of March, down 1.3 per cent on the last quarter of 2003. But it is well ahead of the €243,604 average price for the first three months of last year.

New house prices have continued to rise, up just over 1 per cent on the previous quarter and 11.3 per cent on the year at €238,084.

Housebuilding costs, though outstripping inflation, are up only 3.1 per cent over the 12-month period.

In the capital, the quarterly fall in second-hand house prices was more dramatic at 2.7 per cent, the Department said, while there was a 2.3 per cent rise in the value of new homes. Prices in Dublin continue to be more than 30 per cent ahead of the national average.

The figures were disputed by estate agent Sherry FitzGerald. It said it had recorded a 4.1 per cent rise in the Dublin second-hand market in the first three months of the year and a 3.6 per cent rise for the State as a whole. It said this trend continued into the second quarter of the year.

The data bolsters recent housebuilding projections, recording a 22 per cent rise in the number of housing completions over the same period in 2003, a record year.

This was fuelled entirely by the private sector, where the number of completions was up 26 per cent. The number of local authority and voluntary/non-profit properties built declined on the first three months of 2003.

Economists at Davy this week forecast that 80,000 new homes would be built in 2004, up from the 69,000 high last year. In the first three months of the year, 16,721 properties were completed.

In terms of mortgage lending, the Department reports that loans totalling €4.52 billion were approved by lending institutions in the first three months of the year, up 31.6 per cent annually, with 23,741 loans applications being passed.

Forty-five per cent of loans approved related to new houses, though not necessarily first-time buyers. A total of €3.32 billion in loans was drawn down during the period, a third higher than the figure this time last year.

The growing consensus that interest rates are set to rise is reflected in the significant growth in the number of people opting for fixed rate mortgages, with 47.1 per cent of borrowers choosing this option compared with 34.9 per cent in the three months to March 2003.

Falling rents have seen a reduction in the number of private rented properties registered with the Department from 22,646 in March 2003 to 22,119.

Victor

http://home.eircom.net/content/irelandcom/topstories/3654780?view=Eircomnet

House price growth hits three-year low
From:ireland.com
Saturday, 24th July, 2004

House prices rose by over 11 per cent in the 12 months to the end of last June, but figures published yesterday show that the rate of growth hit a three-year low during the first half of this year.

The Permanent TSB/Economic and Social Research Institute (ESRI) house price index, published yesterday, shows that the average price paid for a house nationally in June was €245,194, a rise of 11.4 per cent on the same month last year. That compared with a 14.7 per cent increase between June 2002 and 2003.

But the index also shows that, in the first six months of this year, prices grew by 4.8 per cent, as against 6.9 per cent in the first half of 2003. This was the lowest six-month rate of increase since the first half of 2001, when the index also recorded a rate of 4.8 per cent growth.

It is also the lowest rate of growth recorded in the first half of the year since the index began in 1997. In terms of the annual rate, only the 11 per cent increase recorded in November 2002 was lower than the June 2004 figure.

The index shows that steam has been coming out of the market for several months. Prices increased by 11.5 per cent in the year to last May and 12.9 per cent in the 12 months to April.

Launching the half-year edition of the index yesterday, Permanent TSB deputy chief executive Mr Diarmuid Bradley said house-price growth was continuing to moderate.

"There is very strong volume demand but that is being balanced by the supply side," he said.

He added that this would continue to shape the market for the near future, with 82,000 new homes likely to be built this year, compared with 72,000 in 2003.

However, Mr Bradley said Permanent TSB, the State's largest mortgage lender, expected house price growth for 2004 to reach 10 per cent "or a shade under it".

Over the seven-year life of the index, the price of the average house has risen from €75,000 to €245,194. The average paid in Dublin in June was €320,498, compared with €292,359 last year. Outside Dublin, the average price was €215,727, compared with €190,257 a year earlier.

First-time buyers paid an average of €213,566, compared with €194,263 in 2003, while second-time buyers paid €277,010 in June, compared with €246,978 12 months previously. New and second-hand house prices grew by 14.7 per cent and 10.8 per cent respectively in the year to June, compared to 12 per cent for both in 2003.

Mr Bradley said that the rate of property price increases outside Dublin in the first half of 2004 was 5.9 per cent, compared to 4.3 per cent within the capital. He said that, while there was a perception that Dublin always enjoyed a higher rate of growth, that was not the case.

In March 1997, prices in Dublin rose 20 per cent while those outside the city grew 10 per cent. Between then and mid-1998, Dublin spurted ahead to 40 per cent, while those in the rest of the country hit 25 per cent.

A year later growth rates converged and remained more or less parallel with each other, except for periods in 2001 and 2003 when Dublin went ahead, and one stage in early 2002 when growth in the rest of the country went ahead of Dublin.

The Permanent TSB/ESRI house price index figures are based on the bank's mortgage lending returns, which represent between 22-24 per cent of the home loans market.

Victor

http://www.thepost.ie/web/DocumentView/did-769994876-pageUrl--2FThe-Newspaper-2FSundays-Paper-2FNews.asp

New house price system set up following criticism
25/07/04 00:00
By Neil Callanan

The Department of the Environment and Local Government is to launch a new system for calculating house price growth later this year.

The department was criticised last week when it published figures that suggested that house prices fell 1.3 per cent nationally and by 2.7 per cent in Dublin in the first quarter of this year.

By contrast, the Sherry FitzGerald barometer of second-hand properties revealed they increased in value by an average of 4.1 per cent in Dublin and 3.6 per cent in the entire country during the first quarter of the year.

The Permanent TSB/ESRI index reported growth of 3.8 per cent in house prices in the first five months of this year.

One statistician said the department's figures reflected the fact that they are based on average prices paid.

``If a large number of expensive properties sold in the last quarter of 2003, then you could naturally have some fall off in the first quarter of this year.

``That is the difficulty with using average prices in this situation,'' he said.

An economist said the methodology used by the department had massive holes in it. ``They don't mix adjust it. If you think that only 8,000-10,000 houses in Dublin are sold a year, then a few big auction results can alter the statistics,'' the source said.

The new system being introduced by the department will be mix adjusted and is expected to gather more comprehensive data from the major lending institutions.

This will allow a more comprehensive analysis of key trends in the market, including details of units purchased for owner occupation or investment purposes.

Information will also be available on region of purchase, age of dwelling, type of buyer, house type and number of rooms.

DKM Economic Consultants was engaged in 2000 to examine the house price information received by the department and to consider proposals for improvements, including a methodology for future data collection and analysis.

The report was submitted to the department in July 2001 and one of the recommendations was the design and production of a mix adjusted house price index.

FD Systems and Mazars Consulting were appointed in April last year to develop and implement a new house price statistics system.

The department also set up a user group, including representatives of all the major lending institutions and local authorities, to allow them to input the specification of the type and format of data to be supplied to the department.