Low stock in Cork brings challenges
The most notable feature of the Irish residential market during the opening months of 2017 was the increase in activity in the first-time buyer cohort. This follows the introduction of several Government initiatives during 2016, largely targeting this group of buyers. The newly implemented help-to-buy incentive has witnessed a high applicant level during the first quarter.
However, challenges persist in the residential second-hand market. Despite strong economic and demographic growth, residential transaction activity remained flat during 2016, in contrast to a normal functioning housing market. The Property Price Register (PPR) reveals that, in Cork, approximately 4,985 properties, excluding multi-family activity, transacted in 2016. Due to the time lag in logging data to the PPR, 2016 data is the most accurate data available. Transaction activity in Cork remained relatively similar to 2015 levels, with a moderate decrease of 1pc recorded.
Furthermore, the historically low level of available stock has restricted sales activity and further fuelled the ongoing lettings crisis. Latest results from the Residential Tenancies Board (RTB) reveal that annual rental growth nationally was 7.8pc at the end of quarter four of 2016. Outside Dublin, annual growth was 7.2pc, compared to 8.9pc in Dublin.
The quantity of property available for sale on the open market nationally has fallen steadily over the past seven years. The latest bi-annual supply side analysis by Sherry FitzGerald Research reveals that, in January 2017, the stock of properties advertised for sale nationally had fallen to approximately 22,100 units, 59pc lower than in January 2010, when 54,100 units were advertised.
The stock of available properties in the regional centres has also fallen significantly. Cork saw just over 2,900 properties for sale in January 2017, representing just 1.4pc of its private stock. These low stock levels magnify the ongoing supply/demand imbalance which exists in the market at present.
Finally, the market saw an increase in price performance during the opening quarter of 2017. According to the Sherry FitzGerald house price barometer, the average value of residential property in Cork rose by 1.8pc during the first quarter of 2017. This compares to a growth rate of 2.5pc recorded in the same period in 2016.
Price inflation in Cork mirrored that of both the South West and the Dublin markets, which also recorded price growth of 1.8pc in Q1 2017. In Ireland, prices rose by a similar level of 1.9pc during the 12-month period.
Construction activity indicators for the start of the year show positive trends in supply, albeit these still remain disappointingly below required demand levels. The latest figures from the Department of Housing, Planning, Community and Local Government show that, on an annual basis, Cork recorded a 28pc increase in completion levels.
Last year ended with a strengthening new homes market, followed by a strong first quarter with first-time buyers driving activity. The most recent data from the PPR reveals that new dwelling sales in Cork were up by a moderate 6pc in 2016. However, this compares to significant growth in Dublin of 50pc, and 17pc growth nationally.
Sheila O'Flynn is managing director of Sherry FitzGerald Cork