Property Crash Over?

2013 was the end of Ireland’s property crash – the worst in the history of the developed world – and this year will see that consolidated in to a recovery, though problems remain.

That’s according to the annual residential property survey from Society of Chartered Surveyors Ireland, which noted that property prices increased across all regions as did the volume of property sales and sales instructions in 2013 with 2014 set for further growth.

According to a survey of 400 estate agents for the report, prices in Dublin are estimated to have risen by 15.7pc in 2013.

While the recovery in Dublin has been broadly recognised, the SCSI survey suggests that prices grew in all regions and in almost all categories last year, with prices estimated to have risen by 5.7pc outside the capital, albeit that they were coming from a very low base.

Its estimated prices increased by an average of 8.1pc in Munster, 4.6pc in Leinster and went up 3.9pc in Connacht/Ulster. The report was compiled by Amarach Research for the SCSI.

Dermot O’Leary, Chief Economist with Goodbody Stockbrokers said 2013 will go down as the year of the recovery in residential property prices but he pointed out that given the level of cash transactions, it was largely a credit-less recovery.

“Renewed consumer confidence has been a key trigger for the recovery and it’s interesting to note that many agents referred to positive media reports playing a big role. They are also saying that mortgage finance became more available during the year and this provides some room for optimism,” Mr O’Leary said.

The key issue in 2014 according to the economist will be supply and he warned that it would be naive to think that the market will cure all its own ills.

“While development financing is available for house building this survey suggests there is a 35 to 40pc equity gap and we cannot or should not expect banks to shoulder all that risk. The construction sector should try to tap into the interest which exists for investment in Ireland to fill that gap,” he said.

But Mr O’Leary urged the banks to provide more options for people in negative equity or with tracker mortgages as this would free up the market overall.

“We must remember that despite the falls, prices still cannot be described as ‘cheap’ in general and the Government must make the right policy choices around financing, development and planning to avoid a repeat of the past” he concluded.

Simon Stokes, Chair of the Residential Group of the SCSI said the property picture was very much a case of an urban led stabalisation and recovery with the regions languishing behind.

While the majority of agents were forecasting possible further price increases in urban areas due to a lack of stock and improvements in sentiment in 2014, future policy needed to take account of the different factors driving demand across the regions in what has become a multi-tiered market.

“In Dublin and parts of Cork, supply is the key driver of increasing prices, but in Munster it’s availability of finance while in Leinster it’s greater consumer confidence. The lack of movement in the property market means fewer second hand family homes are coming on the market together with the absence of new house and apartment building is having a big impact on the property markets, especially in cities. But even within cities the picture is not straightforward with parts of Dublin like the city centre, South Dublin, Fingal and Dun Laoghaire recording double digit growth while others remain flat,” Mr Stokes said.