The dominant feature of the Irish property market last year remained the shortage in supply of homes in all sectors (purchase and rental, large and small, houses and apartments), however, over the course of 2018, there was some improvement in house building activity.
Comparing the first three quarters of 2018 to the same period of 2017 shows that new supply increased at a rate of 28%. New housing completions for 2018 may total around 18,500, up circa 4,000 units from the 2017 figure of 14,435.
Forward looking indicators, such as housing starts, suggest that the improving dynamic in supply will continue. New housing commencements were up almost 25% in October on a year-to-date basis, with the 12-month running total rising to over 21,000 units. Planning permissions surged over the past year and were up by almost 70% year-on-year in the third quarter of 2018. It is important that this soon translates into an acceleration in the pace of growth in house building activity. In this regard, registration figures, which are seen as reflective of developer activity, have started to pick up again after having spent much of 2018 behind their 2017 levels.
Residential property prices continue to rise at a strong pace. However, there has been a noticeable slowdown in the rate of increase since the spring. Nationally, according to the latest CSO data, house prices rose by 8.4% year-on-year in October.
Outside the capital, prices rose by 10.6% year-on-year in October versus their recent high of 15.2% back in June. The deceleration in house price inflation largely reflects the impact of the central bank’s mortgage lending rules, which were tightened again in 2018.
These tighter mortgage lending rules will remain in place in 2019, suggesting that the pace of growth in house prices will stay in single digits this year. The relatively restrictive loan-to-income ratio of 3.5 times may also be serving as a constraint on the pace of growth. However, with the housing market still defined by an on-going shortfall in supply, prices are likely to continue rising in 2019.
The challenge facing the house building sector is to ensure that the surge in planning permissions over the last year quickly translates into sharply higher levels of house building activity. Housing output needs to double from its 2018 levels to meet annual demand and indeed, rise well above this level to meet the pent-up demand in the sector from the years of under-supply. It could be well into the next decade before supply and demand come close to balance, unless the pace of growth in house building accelerates from here.
We in Global Properties have New Homes for sale in Macroom and a number of other developments in the pipeline in Cork City, and surrounds.
Feel free to contact Con Nagle or Barry Nagle with any property related query in 2019. We’ve been advising people about property in Cork for more than 25 years each.