Property prices up 12% nationally as Cork sees surge in house completions
IN the year to June, residential property prices at national level increased by 12.0%, according to figures releasedthis week by the Central Statistics Office (CSO). This compares with an increase of 12.4% in the year to May and an increase of 11.4% in the twelve months to June 2017.
Residential property prices in the ‘Rest of Ireland’ (i.e. excluding Dublin) were 15.2% higher in the year to June. House prices in the Rest of Ireland increased 14.6% over the period. The MidWest region showed the greatest price growth, with house prices increasing 22.3%.
The Border region showed the least price growth, with house prices increasing 4.9%. Apartment prices in the Rest of Ireland increased 20.3% in the same period.
Overall, the national index is 19.5% lower than its highest level in 2007. Dublin residential property prices are 22.2% lower than their February 2007 peak, while residential property prices in the Rest of Ireland are 24.2% lower than their May 2007 peak.
From the trough in early 2013, prices nationally have increased by 79.6%. Dublin residential property prices have increased 92.7% from their February 2012 low, whilst residential property prices in the Rest of Ireland are 74.4% higher than the trough, in May 2013.
According to the Construction Industry Federation (CIF) the CSO’s statistics throw into sharp relief the difficulties facing housebuilding in Ireland and the distance left to travel to achieve balance in the housing market estimated to be a required 35,000 units per year to meet population demands.
On a positive note, they said, measures introduced by the Government, such as the Help to Buy have had an impact and in 2017 completions increased by 4,467 units or 41.6%.
Cork had 353 new dwellings completed in Q1 of 2018 (Jan to March) an increase of 26.5% on the same period in 2017.
Despite these figures, however, much more needs to be done to facilitate viable housebuilding throughout Ireland, not just in urban centres, to keep up with the demands of our growing population, said the CIF.
In 2017, the CIF identified a market failure in finance for regional housebuilders. Financial institutions are not lending outside the Greater Dublin Area and Cork and this will stymie housebuilding figures for the next decade in the regions. This threatens to undermine the National Development Plan, regional economic strategies and Project 2040, and will see a generation of young people migrating to Dublin for their livelihoods.
“The truth is that to achieve the volume of housing we need spread across the country we need the regional housebuilder to be able to access affordable finance. We have to now ensure that regional housebuilders, in areas where there is demand, are supported in building these homes,” said Tom Parlon, Director General of CIF.
“The Federation welcomes publication by the Minister for Finance of the proposals for the House Building Finance Ireland Initiative, which will support renewal of house building activity levels for small to medium sized builders in many regional locations.”
The CIF identified a number of urrent challenges for housebuilders:
Cost of equity and development finance continues to be a major issue.
There is a willingness by financial institutes to re-enter into the market, but they need to see time limited bonds. Cash bonds cause a high finance restriction and the requirement for a coordinated single authority approach is paramount.
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Housing input costs remain high.
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The shortage of sites for the licensed disposal of construction waste. This is a particularly acute problem in Dublin and its immediate surroundings and is driving up construction costs.
Help to Buy scheme is due to end on December 31, 2019. It is important the scheme is extended to minimise market uncertainty.
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