Too many ifs and buts for latest figures to be reliable
Published 29/10/2015 | 02:30
It's "answers on a postcard" time when it comes to assessing what the latest CSO property prices, published yesterday, can really tell us - aside from the fact that prices appear to be generally rising, sort of.
The statistics probably raise more questions than they answer, in a market which is so infused with irregularities that it is quite impossible to tell with certainty what exactly is going on.
For example, why would Dublin house prices appear to surge by 3pc in August, after rising by just 0.6pc the previous month, July, while having just fallen by 0.3pc a month previously in June? Analysing property prices has been made extraordinarily difficult by a number of factors, not least the nature of the CSO statistics themselves.
Based on mortgages drawn down, the CSO stats have a built in "lag" of about three months (the period from when a sale is agreed to when a mortgage is drawn down) and they don't include cash sales, which are recently resurgent at between 50pc and 60pc of purchases.
The "lag" would therefore suggest that August's spike of 3pc could actually reflect May's figure, or maybe even April's - if rumours of a slowdown in mortgage payout processing are to be believed (again, thanks to increased complications with the new regime).
Add to this that banks have permitted borrowers to keep "old" mortgage approvals made late last year for at least six months before expiry, and some suggest the reality is up to 12 months. If this has been the case, then the August (or was it April / May?) spike in Dublin could reflect an inflationary burst of buyers anxious to get in before their more lenient approvals expired.
To complicate things even further, the Central Bank permitted banks to exceed LTV rules in 15pc of cases and income limits (3.5 times) in 20pc of cases.
Some have suggested that the banks, in their infinite wisdom, have used up all these "get out of jail" cards for their borrowers in one go.
If they did (again, we don't really know), then that might also account for a temporary and inflationary splurge in spending. In a time of very tight supply, even a few hundred more frantic buyers in Dublin could make a marked temporary difference in price. So if we have frantic 2014 mortgage holders clashing with a surge of laid back LTV and income-limit waiver holders, and mixed with 50pc cash buyers, then a temporary inflationary surge was likely.
Meanwhile, a surge has also been taking place in commuter town prices as newly disenfranchised Dubs compete for homes - and the rest of the country is a full year behind on the cycle.
But one thing is certain, without supply where it's needed, the only way for prices is up.