Housing stock dries up while activity levels off
There has been a considerable and welcome focus on the residential market over the course of the past year. For too long the Irish housing sector has bounced from one crisis to another, without any clear direction or plan for its long-term stability. The announcement of the Government's Action Plan for Housing and Homelessness this summer has provided a vision for housing, together with a clear strategy on how the vision will be achieved.
The overall plan is ambitious, it is the road map for the future. It is now essential that the plan is actioned. As such, it is crucial that the entire Government supports this ambitious plan, by prioritising the necessary supporting policies in the forthcoming Budget.
The difficulties in the housing market have been well documented, however it is still worth stating that despite the focus on the market of late, little has changed.
In the first instance the crisis in terms of supply has deepened. The latest analysis by Sherry FitzGerald Research reveals that the quantity of property available for sale in Ireland has deceased further.
In July 2016, approximately 27,800 residential units were advertised for sale nationwide, a reduction of 14pc on July 2015. This represents only 1.5pc of the private stock. Available stock in Dublin was down 18pc annually, with approx 4,600 units advertised for sale in July 2016. Commuting counties around Dublin and regional centres also all recorded a notable decrease in supply during the year.
It is also worth noting that despite the re-emerging strength of the economy and growing population transaction levels remain moderate. The Property Price Register reveals that approx 21,100 residential units transacted during the opening half of 2016. When you exclude multi-family/portfolio sales, this figure reduces to approximately 19,750. As such transactions nationwide fell by 1pc compared to the same period in 2015. The lack of stock available to purchase is also repeated in the rental market with notable shortages in the quantity of property available to rent. This is reflected in rapidly rising rents to pre-crisis heights.
The same is not true in the price of properties which although increasing are still 40.4pc below peak levels of 2006, according to the Sherry FitzGerald barometer of price performance.
All in all the market remains very challenged, with moderate levels of construction and transactions, low stock and rapidly rising rents. It is essential that the plan outlined in July is supported through Budget 2017, if a stable functioning market is to re-emerge.
Marian Finnegan is chief economist at Sherry FitzGerald Group