House prices and retail sales march higher in April 

The CSO’s Residential Property Price Index (RPPI) shows that Irish residential prices rose 1.4% m/m in April, bringing the annual rate of growth to 8.5% y/y.

The headline RPPI had a sluggish start to 2014, falling 1.3% over Q1.

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The Q1 move did not appear to reflect the underlying dynamics in the Irish housing market – indeed, the country’s largest property website,, reported that asking prices increased in most areas in the first quarter of the year. So perhaps the reported m/m increase in April is flattered by an underestimate of how the market performed in Q1. In any event, the 8.5% y/y rise in April brings the annual rate of change in prices back to a level last seen in June 2007.

Within the index, we note that the annual rate of change in prices in the capital continues to outstrip the rest of the country. Dublin residential prices rose 3.1% m/m in April, bringing the annual rate of change to 17.7% – the fastest rate of growth on a year-on-year basis since October 2006. Dublin prices have now increased by 20.9% since the trough, but remain 48.5% below the all-time high reached in February 2007.

Outside of the capital, prices fell 0.3% m/m in April – a second successive monthly decline – but were 1.3% above year-earlier levels. Prices outside of Dublin are only 2.6% above the trough and remain 47.4% below the all-time high reached in September 2007.

So, while the headline rate of growth in prices is certainly eyebrow raising, it is important to note that prices across Ireland remain significantly below peak levels.

Core retail sales volumes grow 4.6% y/y in April

The CSO also released Retail Sales data for April this morning. At a headline level, volumes fell 0.9% m/m but rose 6.8% y/y in April, while core sales, which exclude the volatile Motor Trades component, rose 1.6% m/m and 4.6% y/y. Headline retail sales have posted y/y gains for six successive months now.

Looking across the 13 different components of the retail sector we note some encouraging signs. Ten of the 13 components recorded volume growth on an annual basis in April, with the ‘big ticket’ items prominent among the sectors showing the biggest increase – Furniture & Lighting +29.9%, Motor Trades +15.8%, Clothing & Footwear +12.6% and Hardware, Paints & Glass +10.7%. The strength in the Furniture & Lighting and Hardware, Paints & Glass sectors likely reflects the turn in the fortunes of the property market, allied to tax incentives to encourage home improvement work in Budget 2014. The jump in Motor Trades volumes is particularly encouraging, as it likely reflects the significant uplift in consumer sentiment in recent months.

The only areas to post a decline in volumes on an annual basis were Food, Beverages & Tobacco (-0.7%), Pharmaceuticals, Medical & Cosmetic Articles (-3.7%) and Books, Newspapers & Stationery (-6.4%).

It seems that Q2 got off to a good start from a consumer spending perspective, but the delta between volume growth (headline +6.8% y/y, core +4.6% y/y) and value growth (headline +4.4% y/y, core +2.8% y/y) shows that discounting is still necessary to help get some deals over the line. This may be partly explained by yet another release from the CSO today (the latest earnings and labour costs data), which show that average weekly earnings fell 0.4% y/y in Q1 2014. In any event, we continue to expect to see personal consumption make a positive contribution (+1.3%) to the national accounts in 2014, following last year’s 1.1% decline.

Source: Philip O’Sullivan, Investec,