Download full report with analyst certification and important disclosures
Jan 2 2018, 08:00 GMT
The latest MyHome property report shows a 1% fall in Q4 2017 but with prices up 10.2% on the year – the fastest pace of asking price inflation since early 2015. The number of homes listed for sale is down 9% on last year, but we still expect growth in housing transactions in 2018 as more homeowners move out of negative equity.
The latest MyHome property report shows a small 1% drop in asking prices in the final three months of 2017. However, this is in line with normal seasonal trends. Asking prices have fallen in the final quarter of each of the last five years before bouncing back in the spring. We expect a similar pattern in early 2018. In fact, the 1% fall towards the end of 2017 is smaller than the 2% decline in Q4 2016. This means that annual asking price inflation has accelerated to 10.2% – the fastest pace since early 2015.
The Irish housing market grinds tighter. The 18,900 properties listed for sale is down 9% on last year. Nonetheless, housing market transactions look set to rise by 10% in volume terms in 2017 towards 55,000. We expect transactional activity to grow further in 2018, helped by Irish households building equity in their homes and therefore being more willing to move.
The Central Bank of Ireland has tightened its mortgage lending rules. The proportion of high loan-to-income mortgages (over 3.5x) given to first-time buyers was 24% in H1 2017 and will have to fall back to the 20% stipulated under the new rules – cooling house price inflation in more expensive areas (most likely Dublin) in 2018. Looking ahead to 2018, we still expect a robust pace of house price inflation close to 8%. However, the pattern of house prices that we had seen up to 2017 is likely to be re-established. Double-digit price gains are still likely outside the capital, where the recovery began later, prices are cheaper and there is still scope for leverage on mortgage lending to rise. Dublin should see a more sedate mid-single-digit gain similar to the 6.6% rise recorded through 2016.