AFTER six turbulent years when house prices fell by over 57pc in nominal terms, the Irish housing market has begun to stabilise. The latest results from the Sherry FitzGerald barometer of the national market reveal that Ireland enjoyed a second quarter of relative stability with overall prices rising in both the Dublin and Irish housing markets. That said, this strength is largely emanating from the regional centres and the counties surrounding Dublin; specifically Kildare, Wicklow and Meath.
In the first six months of 2013, Irish house prices have risen by 3.6pc while Dublin prices have increased by 6.1pc. When Dublin is excluded from the national figures, the year to date figures are still marginally positive having risen 0.5pc.
That said, the Irish housing market is a function of a myriad of sub-markets which are not all enjoying the same performance trends. The property price register does provide us with details on the performance on a county by county basis.
While overall activity increased by over 37pc during 2012, some locations such as Sligo, Roscommon, Longford, Wexford and Dublin, saw the number of transactions increase by greater than 50pc during the year.
Such figures suggest that 1.4pc of the private housing stock transacted during 2012. This is still well below normal activity levels by either historical or international standards. Notably, on a county by county basis, the strongest performance was in Dublin with about 1.8pc of the Dublin housing market transacting during 2012. The lowest proportionate activity occurred in Monaghan where 0.8pc of private housing stock transacted.
The market is largely dominated by owner-occupiers, 77pc, however it is notable that the proportion of investors in the marketplace has increased to 13pc in the year to date. Cash is king with 44pc of the properties transacted in the opening quarter bought outright with cash alone. Cash purchasers include owner- occupiers re-entering the market having sold their family homes some time ago, investors interested in achieving a strong yield and non-residents interested in attaining a piece of the value in the Irish market.
In considering the performance of the lettings market it is worth noting that 31pc of vendors who sold their property through Sherry FitzGerald Group were selling investment properties while only 13pc of purchasers were investors.
This suggests a depletion of investment product and therefore upward pressure on rents.
The overall performance of the market is a function of the stock that is for sale. Our latest data on supply suggests that the total stock of available property for sale in the second-hand market nationwide stood at 52,532 units; representing 2.9pc of estimated private housing stock respectively. To put this into context, international standards would suggest a market availability rate of about 6pc to represent equilibrium; in other words a normally functioning market.
The range of stock available for sale varies widely by location. Dublin, with approximately 6,400 units advertised for sale, has the lowest proportion for sale in the country; 1.3pc of the estimated private housing stock is available in the capital. In contrast, Longford with 869 units has the highest proportion for sale in the country, representing 5.2pc of the estimated private housing stock.
By sub-dividing out the cities from the county data in the regional centres, it is worth noting that only 2.3pc of the private stock in Cork city and 1.8pc of the private stock in Galway city are available for sale. Such figures, which are only slightly greater than the 1.3pc recorded in Dublin, suggest that both these locations are also beginning to see a supply pinch-point, which is positively impacting price performance in both locations.
Looking to the year ahead, one would expect to see a continued uplift in investor activity as investors attempt to benefit from the CGT incentive in place until the year end. The owner-occupier market is also expected to remain strong with a notable uplift in enquiries from households trading down, who now feel that the market is strong enough to allow them to sell effectively and facilitate this move.
This is generating an uplift in enquiries for smaller homes and apartments, all of which will benefit the natural flow of properties through the market. All-in-all one can expect 2013 to be a year of heightened activity and greater market stability.
Marian Finnegan is chief economist, Sherry FitzGerald Group