AIB/ESRI Housing Market Index indicates housing markets bounce back

The AIB/ESRI Housing Market Index that measures the population’s perception of the state of the housing market and where they see house prices going rose significantly during the second half of last year, it was also noted that a sizable shift in consumer expectations in relation to house prices from July to December 2013.

Those consumers surveyed who believe house prices will be higher in 12 months’ time increased from 29.2pc to 46.3pc.

Consumers expect that house prices will increase by 2.1pc over the next 12 months. Dublin-based consumers expect higher house price growth, with growth of 3.6pc expected over the next 12 months.

The index increased overall to 104.4 in December 2013 from 100 at the end of September 2013, based on a three month rolling average.

The main risks to buying noted in December by consumers was ‘worries about future income’ or ‘affordability concerns’ (58.4pc), followed by ‘fears about increasing interest rates’ (17.7pc).

Also cited were ‘changes in family circumstances’ (16.3pc), as was ‘possible changes in house prices’ (6.5pc).

The main reasons for not buying noted by consumers surveyed included that they are ‘satisfied with their present dwelling’ (54.6pc), followed by ‘cannot afford it’ (22pc).

ESRI economist, David Duffy said consumer’s perceptions are an important factor in their housing market decision making.

“This new index tracks how consumers view the performance of the housing market. The index shows that consumers have become more positive about the housing market in recent months. In addition, this new survey also asks consumers what they think will happen to house prices. In December consumers expect that house prices will increase by 2.1pc over the next 12 months, up from 1.7pc in November,” he said.

AIB Head of Mortgages, Jim O’Keeffe said: “We are delighted to launch the new Housing Index with the ESRI, which will provide a unique insight into the property market in the coming years. The index indicates that consumer confidence is beginning to return to the market which is in line with our own application and drawdown activity. Concerns around affordability still remain strong amongst potential buyers and for that reason we have launched a new online mortgage portal which will allow customers to review how much they can borrow, cost of repayments and even allow them to progress to ‘approval in principle’. We believe that this development will be extremely beneficial in reducing the complexity associated with buying your new home.”