Consumer confidence on up as we expect house prices to keep rising
MOST people expect house prices to rise this year, a new survey shows.
And the research, commissioned by AIB and carried out by the Economic and Social Research Institute, indicates that the positive views about the property market among consumers have strengthened.
Consumers expect that house prices will increase nationally by 2.1pc over the next 12 months.
Dublin-based consumers expect higher house-price growth, with growth of 3.6pc predicted over the next 12 months, according to the new housing market index from AIB/ESRI. Prices could rise by 1.3pc in the border, midlands and west regions.
The survey was conducted with over 800 consumers between July and December 2013.
The index points to a "significant shift" in consumer expectations from July last year when compared with December.
This was evident from the fact that the number of consumers surveyed who said they believed that house prices would be higher in 12 months' time increased from 29pc to 46pc. The main risks to buying noted by consumers in December were "worries about future income'" or "affordability concerns".
More than half of those asked said issues around affordability and their future income were the main concerns they have about buying a home.
This was followed by "fears about increasing interest rates".
Also cited were changes in family circumstances, and possible changes in house prices.
ESRI economist David Duffy said the new index tracks how people view the housing market. "The index shows that consumers have become more positive about the housing market in recent months.
"This new survey also asks consumers what they think will happen to house prices. In December consumers expect that house prices will increase by 2.1pc over the next 12 months, up from 1.7pc in November."
Head of mortgages at AIB Jim O'Keeffe admitted that potential buyers of houses and apartments were still concerned about whether or not they could afford a property.
But he said that this concern was beginning to lessen, and the bank was starting to see a higher number of applications for mortgages, with more funds being drawn down to buy property.
The most recent figures from the Central Statistics Office (CSO) showed further evidence of recovery in the Irish housing market.
In the year to November, residential property prices at a national level rose by 5.6pc, the sixth annual increase in a row.
Dublin house prices were up 13.1pc in the year, the 11th consecutive annual rise.
The price of residential properties in the rest of Ireland was unchanged in the month, but was down 0.6pc on an annual basis.