Saturday 23 September 2017

Whisper it - the market has finally turned the corner

Home Truths

The Irish Property Market has finally turned a corner
The Irish Property Market has finally turned a corner
Mark Keenan

Mark Keenan

WHEN it finally happened, just about everybody missed it.

It occurred quietly on January 1 -- Sherry FitzGerald issued its quarterly bulletin of property price statistics -- one of the numerous bulletins the estate agency network's research department has been churning out four times a year since the 1990s.

For media attention, the New Year's Day timing was poor and the data was also overshadowed by a MyHome.ie report on the chasm between Dublin and country asking prices. The latter gained a slot on the main RTE news and became the national property story of the week.

But the difference between the most recent Sherry FitzGerald bulletin and the other 24 price reports the agency has issued since the crash is that it was the first published anywhere in Ireland to show that the majority of our homes are now increasing in value.

According to the data, prices rose nationwide by 9.2pc in 2013.

This news won't make it any easier for those stranded vendors who are trying in vain to sell their homes in certain hard hit counties where you still can't flog a three-bed home for €30,000.

Nonetheless nationwide, more Irish properties are now rising in value than are falling in value.

Dublin saw its prices rise 4.1pc in the last quarter of the year and by 14.1pc for 2013 overall. However, even when Dublin's weight is excluded, the rest of the country still saw prices grow by 3.2pc.

Commenting on the results, chief economist of Sherry FitzGerald Marian Finnegan said: "After six consecutive years of price deflation, 2013 saw a return of price inflation in the Irish residential market. That said, all markets did not benefit equally from this recovery."

There was another surprise, Dublin's rate of inflation was closely mirrored in another city -- Galway, where prices hiked 13pc according to the report. Next came Cork City which saw house prices rise 4.5pc in 2013.

Keeping track of property price trends can be a difficult business these days given that there are at least five different organisations issuing different figures for every quarter.

Despite being published by an estate agency network with an obvious vested interest in selling property, the Sherry FitzGerald monitor is probably the most important one to watch right now.

And for relevance it is closely followed by the improving DNG statistics machine which is reliant on real deal evidence.

Traditionally the MyHome.ie and Daft.ie monitors have been based on asking prices. These tend to be well off sales price actually achieved.

The CSO's state-run monitor is flawed by lag and is probably between three and four months out of date. This is because it is based on mortgages which are often not drawn down until many months after the sale price is agreed.

Therefore, a "sale" which the CSO says took place in January could quite possibly have been agreed back in September.

On top of this, the CSO monitor does not include cash sales and these now account for about half of transactions at the moment.

In contrast, the Sherry FitzGerald monitor is based on the "weighted basket" method. This is a system which is approved by statisticians and economists and used by big pension funds to measure their property portfolio performances.

The agency values the same "basket" of more than 1,500 real properties over and over again. The properties have been chosen to best represent Ireland's particular locational and type mix, hence the "weighting".

So for example around one-third of the properties valued are from Dublin -- where around one-third of our properties are located.

Of course you could argue that an estate agency will take a brighter view of property values than anyone else. But the fact remains that when we look at this monitor retrospectively, its numbers have almost always been right, going right back to 1996 (for Dublin) and to 1999 (for a countrywide picture). Chances are its news is credible.

So whisper it -- the Irish property market has finally turned the corner.

Irish Independent

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