Rising house prices 'mask true dysfunction of property market'
The property market is in crisis, with low levels of property transactions, large numbers of investors selling up and almost half of purchases made with cash.
Leading estate agency Sherry FitzGerald said the stock of properties available for sale had fallen to the lowest level on record. There were just 26,800 units advertised for sale across the country in January.
This was a mere 1.4pc of the private housing stock, the estate agency said.
Economist at Sherry FitzGerald Marian Finnegan said there was "increasing evidence of a market in crisis".
Although prices rose in the first three months of the year, this hides problems with the market.
"The level of price inflation in the opening quarter was largely consistent with the same period in 2015, and notably lower than the opening quarter of 2014. That said, such figures do mask the true dysfunctional nature of the market."
And she warned that the crisis would only get worse, as she pointed to a number of market factors, including the situation where the stock of property available to sell has fallen to the lowest point on record.
In Dublin, less than 1pc of the private housing stock is on the market. In other regional centres supply of properties for sale was "incredibly low", she said.
A separate report from Daft.ie yesterday found similar problems with low levels of supply, pointing out that the number of homes for sale is at its lowest level in nine years.
Ms Finnegan also warned that there was a mismatch between the quantity of private investors entering and leaving the market. Research by Sherry FitzGerald showed that as many as 46pc of all sales in the first three months of this year were by investors off-loading their properties.
But just 19pc of all properties were purchased by investors.
"This suggests that for every one private investor who has bought in the market during the year to date, two have exited the market," Ms Finnegan said.
She said this was having a debilitating impact on the rental sector. Another factor that was contributing to the dysfunctional nature of the market was the slowing down of the volume of property transactions.
Cash buyers remain strong, accounting for 46pc of all residential transactions in 2015.
Sherry FitzGerald said the average value of residential property rose by 1.3pc in the first three months of this year. The rise in value of average properties was up 3.5pc when compared with a year ago.
The average value of residential property in Dublin rose by a modest 0.7pc in the first quarter of 2016.