Media: House prices outside Dublin have not bottomed out, and divergence widening

The_Conductor

http://www.irishtimes.com/business/economy/ireland/optimism-over-rise-in-dublin-house-prices-1.1641588

Thu, Jan 2, 2014, 01:00

First published: Thu, Jan 2, 2014, 01:00



The Dublin property market has “turned a corner”, but prices outside the capital have not yet bottomed out and the divergence is widening, according to the latest Property Barometer from website MyHome.ie. The study finds that there is now a 28 per cent difference between asking prices in Dublin and prices across the Republic as a whole: a year ago the difference was 17 per cent.

MyHome.ie’s latest figures show that the annul mix-adjusted asking price (an average measure that takes account of housing with different characteristics) in Dublin rose by 2.4 per cent to €241,392 last year, while nationally, they declined by 5.9 per cent to €189,086.

Caroline Kelleher from DKM Economic Consultants, which compiled the Barometer, said Dublin prices had been rising from about March last year, due largely to short supply. She expects the divergence between Dublin and the rest of the State to increase further in 2014.

MyHome.ie, which is owned by The Irish Times, noted that while national asking prices continue to decline, the 0.9 per cent fall in the final three months of 2013 was the slowest in six years. The website has seen particular signs of price stabilisation in Cork, where the median asking price (the so-called “middle” price, where half of properties are less expensive) was unchanged at €195,000 for all of 2013.

For Dublin, the median asking price was €249,500 at the end of the year, down €500 on the third quarter, but a quarterly increase of 8.9 per cent was recorded in Dublin South City. Dublin North was the weakest part of the county, with a 1.7 per cent decline.

Median prices also declined over the quarter in Limerick (4.5 per cent), Galway (2.9 per cent) and Waterford (9.1 per cent).

A further breakdown of the data shows that median asking prices for four-bed, semi-detached houses rose in a number of counties in the last quarter of 2013, but fell by 1.3 per cent in Dublin. MyHome.ie described the decline as “small” and noted that it was the first quarterly drop since early 2012.

MyHome.ie managing director Angela Keegan highlighted a “weak supply situation” in key parts of urban centres, which she expects to continue this year. She pointed out that there are about 3,000 properties on sale in Dublin at the moment, which is down 30 per cent on 12 months ago.

“ We are also seeing very low volumes of housebuilding and planning permission being granted for apartments, when there is a clear demand for family homes,” said Ms Keegan.

She believes the average price increases seen in Dublin are “unsustainable over the medium term” and called on the Government and local authorities to “take action”.

“The weak supply of new housing stock, particularly in Dublin, will be one of the main challenges facing the property market in 2014,” Ms Keegan said..

The most recently-available figures on sale prices from the Central Statistics Office showed an average national increase of 5.6 per cent in residential property values in the year to November. These figures are based on purchases backed by mortgages, with MyHome.ie estimating that half of such deals are based purely on cash.

moxin

For the SCD heads who harp on about SCD continuously here....Dublin South -0.6% with Dublin overall -0.2%. Median asking prices of course, they used to do the average but they changed it?

gaius c

Think these figures need to be treated with extreme caution.
They are only asking prices and as such, are prone to being influenced by public perception.

PPR will give us better figures despite the low transaction volume.

The_Conductor

moxin wrote: »

For the SCD heads who harp on about SCD continuously here....Dublin South -0.6% with Dublin overall -0.2%. Median asking prices of course, they used to do the average but they changed it?

And its 'asking prices' too, not achieved prices.......

spockety

The_Conductor wrote: »

And its 'asking prices' too, not achieved prices.......

It is utterly astounding that even with the presence of the Property Price Register, the media and other commentators still rely on stuff like Daft or MyHome asking prices, or even the CSO index of what is effectively mortgaged properties only.

cast_iron

spockety wrote: »

It is utterly astounding that even with the presence of the Property Price Register, the media and other commentators still rely on stuff like Daft or MyHome asking prices, or even the CSO index of what is effectively mortgaged properties only.

Yes, I don't understand it at all.

Why on earth does the CSO only record mortgages (40% of market) and not include cash sales (60% of market), and then present them as a reflection of the entire market?

Asking prices will most likely vary quite a bit from achieved prices between a (supposedly) rising market in Dublin and a falling market in Leitrim. So the "all else being equal" comparison doesn't work there either.

I strongly suspect the usual vested interests (government, media) like to talk up the property market for their own interests, so getting accurate figure on the reality of the situation is almost impossible.

Of course, these intricacies of the stats are not being either presented or queried by anyone.

randomperson12

this website is stupid alot of the time no new updates a such

iguana

cast_iron wrote: »

Why on earth does the CSO only record mortgages (40% of market) and not include cash sales (60% of market), and then present them as a reflection of the entire market?

How correct would it be to assume that cash purchases are, overall, quite a bit cheaper than purchases requiring a mortgage? So using only figures from purchases requiring a mortgage leads to a misleadingly 'positive' spin on house prices.

spockety

iguana wrote: »

How correct would it be to assume that cash purchases are, overall, quite a bit cheaper than purchases requiring a mortgage? So using only figures from purchases requiring a mortgage leads to a misleadingly 'positive' spin on house prices.

I always thought the opposite, in that people with a lot of cash are prepared to spend more to secure the property they want than someone on a comparable income could afford with a standard mortgage arrangement.

iguana

Being a cash purchaser is a strong position to be in no matter what the economy is like as you can move quickly and with none of the hindrance someone in need of a mortgage may face. For a vendor it eliminates most of the uncertainty about accepting an offer and as such can make them willing to accept a lower offer. In the current economy, in which it is so very difficult to get a mortgage, a cash offer becomes significantly more valuable and means plenty of vendors prefer the near guarantee of a lower sum in 3 weeks to the higher sum offered by someone who may search for months for financing before having to take back their offer.

Glenbhoy

iguana wrote: »

How correct would it be to assume that cash purchases are, overall, quite a bit cheaper than purchases requiring a mortgage? So using only figures from purchases requiring a mortgage leads to a misleadingly 'positive' spin on house prices.

I don't think that we can really assume anything like that at. It may be the case, but equally, given the difficulty in accessing credit, I would think that most high value purchases are predominately financed by cash.

cast_iron

I would tend to agree with iguana.
For a start, I'd guess a fair percentage cash purchases would not be first time buyers or the like, but rather investment properties or second homes.
The overwhelming majority of Allsop's auctions sales were cash purchases if I remember rightly.

It's a sad indictment that we even have to debate this. It was the Troika that made us introduce the PPR, and at that, it's half-assed at best.

Gone West

spockety wrote: »

It is utterly astounding that even with the presence of the Property Price Register, the media and other commentators still rely on stuff like Daft or MyHome asking prices, or even the CSO index of what is effectively mortgaged properties only.

Sure, Irish Times will rely on their child company myhome.ie for the stats, just as the likes of distilled media will use the daft.ie's super economist staffer to whip up some numbers from their own database.

cson

Fuzzy wrote: »

Sure, Irish Times will rely on their child company myhome.ie for the stats, just as the likes of distilled media will use the daft.ie's super economist staffer to whip up some numbers from their own database.

Exactly.

Vested interest in spinning a rising prices story.