Housing Market Report Q2 2014

Transcription

1 SCSI Housing Market Survey Q2 20/08/ :09 Page 1

2 2 Commentary We would like to welcome you to the first publication of the (SCSI). The SCSI represents the first publication in a quarterly series which will track market activity, purchaser composition, property financing, house price expectations and current market issues. The SCSI is based on the Central Bank of Ireland & SCSI Survey of Property Professionals. Participants of the survey include surveyors and estate agents, as well as those with a more indirect involvement in the industry such as economists, market analysts and academics. The SCSI is mainly concerned with market participants' price expectations; however, questions are also included on activity levels and factors most likely to impact on demand. Data has never been so important to the public and other stakeholders in the property market and will continue to be important in guiding decision making particularly as the economy begins to improve and it is timely that this report is published. While we already have good estimates of average historic property price changes, this report seeks to provide some lead indicators in relation to activity levels and price expectations in the property market by property professionals who are closest to the activity levels, transactions and property market dynamics on the ground. The SCSI is a snapshot of respondents expectations formed at a given point in time, and as such can provide only limited inferences about future property price dynamics based on current trends. The survey results, also need to be considered in the context of a property market which remains highly sensitive to changes in the wider economy and Eurozone. It should be noted that this, while based on the Central Bank of Ireland & SCSI Survey of Property Professionals, is compiled by and is reflective of the views of the SCSI only. The Central Bank of Ireland & SCSI Survey of Property Professionals data is used by the Central Bank for a variety of purposes including its Macro Financial Review. Given the importance of the housing sector to the overall economy, and the need to provide more information and transparency around dynamics that influence the market, we hope that you will find this report useful and informative. The SCSI would like to express its gratitude to the Central Bank of Ireland for compiling and presenting the survey results over the period of this quarterly survey and for permitting the publication of some of the data.

3 3 Highlights The majority of respondents, across all categories, report themselves busier (more active or a lot more active) in than the previous quarter. Particularly so in the case of sales enquiries from buyers (76% reported themselves more active or a lot more active) and sales completed (69% believed they were more active or a lot more active). Cash purchases accounted for about 35% of the transactions in Q2 which suggests that the level of cash transactions is beginning to moderate. First Time Buyers (FTBs) are the dominant category in terms of buyer type this quarter accounting for 44% of transactions. Movers accounted for 29% of the market, while about 22% of units were purchased as BTL/investment properties. The increase in purchases of investment properties suggests an increase in confidence from investors supported by improved yields and finance availability. Houses accounted for approximately 74% of properties sold with apartments accounting for 13% and town houses for 12%. This suggests that the majority of the demand for property is still for traditional family type houses. 29% of respondents expect that that there will be no change in national house prices in the next quarter while 25% of respondents believe that house prices in Dublin may rise by 5% in the next quarter. 90% of respondents expect that average national house prices will be higher in 12 months time. 30% of respondents believe residential property prices nationally will grow by 5% in the next 12 months. In terms of expectations for the Dublin residential property market, 97% of respondents envisage higher prices in the capital over the next year. Approximately 25% of respondents expect prices to be 10% higher in 12 months time. The majority, particularly those operating in the more urban environs believe demand is currently outstripping supply in their area. However this is not the case in every region as there is still an oversupply in certain regional locations. 90% of respondents currently view a greater demand for housing than supply. 70% of respondents believe demand for residential property in Dublin will be higher than supply in 12 months time. Failed property transactions at a late stage in the sales process remain an issue with over 30% due to problematic reports, deeds and surveys. Note: Due caution must be exercised when interpreting the results given the low response rates for some questions particularly until the dataset is further developed over the coming quarters.

4 4 Housing Market Activity in Quarter 2 Chart 1: Housing Market activity in Quarter 2 Sales completed Sales agreed Sales enquiries Sales instructions per cent A lot less Less activity Approximately the same More activity A lot more Note: Chart based on the responses of at least 76 individuals The majority of respondents report themselves as being busier in the second quarter of % of respondents reported more sales instructions from vendors, 76% reported more sales enquiries, 64% reported more sales agreed and 69% reported more sales completed. Buyer Type Chart 2: Buyer Type 0.3% 0.3% 4.5% FTB BTL Mover Holiday Home 22.0% 43.8% Other Don t know 29.2% Note: Chart based on details of 336 properties given by 46 individuals

5 5 First Time Buyers (FTBs) are the dominant category in terms of buyer activity, accounting for 44% of all buyer types. Movers accounted for a further 29% suggesting a moderate improvement in housing mobility, possibly due to recent house price increases lifting some properties out of negative equity and also the recent availability of products allowing people to move and retain their tracker mortgages. Buy to Let investors accounted for 22% of buyers suggesting an improved outlook for investment in residential property. The increase in purchases of investment properties suggests an increase in confidence from investors supported by improved yields and finance availability. Chart 3: Average Property Type Sold in Q2 Type of housing units sold 2014 Q2 Town HSE 12% 4.5% Other 0.9% Apartment 13.3% Detached 36.7% Semi-D 37% Source: Central Bank & SCSI Survey of Property Professionals Note: Chart based on 324 housing units Detached and semi-detached houses accounted for 74% of properties sold with apartments accounting for 13% and town houses for 12%. This reflects a continued demand for traditional family-type homes from purchasers.

6 6 Chart 4: Finance Method Mortgage 4.5% Non-Mortgage 34% Don t know 62% 4% Note: Chart based on 336 properties given by 46 individuals Cash purchases accounted for about 35% of the transactions in Q2. Data from the SCSI Annual Residential Property Review and Outlook 2014, published in Q1 2014, states that cash purchases accounted for around 50% in the market. It is too early to tell if a trend of reducing cash purchases is emerging but the data would indicate that in Q2, there was a reduction in the levels of cash purchases which we will continue to monitor. This suggests that cash buyers may have reduced in the market and also that mortgage availability has improved.

7 7 House Price Expectations Chart 5: National Price Expectations Next Quarter Expectations of (one quarter ahead) Q-on-Q change in residential property prices 30 per cent of respondents > >10 Anticipated change Note: Chart based on 32 responses In terms of expectations for national property prices over the next quarter, approximately 28% of respondents believe there will be no change in prices over the coming quarter while approximately 25% believe there will be an increase of up to 5% in average property prices, depending on location.

8 8 Chart 6: Dublin Price Expectations Next Quarter Expectations of (one quarter ahead) Q-on-Q change in residential property prices: per cent of respondents > >10 Anticipated change Note: Chart based on 31 responses. In terms of expectations for Dublin property prices over the next quarter, approximately 22% of respondents believe they will grow by 5% and 12% of respondents believe they will grow by 10%. Chart 7: Expectations of National Property Prices 12 months ahead Expected direction of Y-o-Y change in residential property prices: 1 year ahead (Regional) SW SE MD ME BDR NAT W DUB decrease no change increase Note: Chart based on a maximum of 34 responses (National) and a minimum of 12 (Mid West) 90% of respondents expect that average national house prices will be higher in 12 months time. 30% of respondents believe residential property prices will grow by an average of 5% in the next 12 months.

9 SCSI Housing Market Survey Q2 20/08/ :09 Page 9 Chart 8: Price Expectations Dublin property prices 12 months ahead Expectations of year-on-year change in residential property prices: 1 year ahead 25 per cent of respondents > Anticipated change Note: Chart based on 29 responses In terms of expectations for the Dublin residential property market, 97% of respondents envisage higher prices in the capital over the next year. Approximately 25% of respondents expect property prices in Dublin to be 10% higher in 12 months time. 9

10 10 Supply/Demand Conditions The majority of respondents, particularly those operating in urban environs believe demand is currently outstripping supply in their area. However this is not the case in every region as there is still an oversupply in certain regional locations around the country. Chart 9: Current views on local supply/demand conditions per cent observations 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Midlands Mid-West South-West Border West Mid-East South-East Dublin Demand > Supply Supply>Demand Supply=Demand no. of obs (rhs) Note: Chart based on 63 responses 90% of respondents in Dublin view there being greater demand for housing than supply In the West, 60% believe that supply is greater than demand and in the Mid-West, 80% believe that there is an oversupply relative to demand In the Midlands, 70% believe demand is greater than supply In the South East, 66% believe that demand exceeds supply but in certain areas demand is already equalling supply

11 11 Chart 10: 1 year on views on local supply/demand conditions per cent 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% observations Midlands Mid-West South-West Border West Mid-East South-East Dublin Demand > Supply Supply>Demand (lhs) Supply=Demand (lhs) no. of obs (rhs) Note: Chart based on 64 responses In 12 months time, 70% believe demand will continue to exceed supply in Dublin. In the west, 60% believe that supply will be greater than demand in 12 months time. In the mid-west 75% believe that supply is expected to exceed demand in 12 months time. Chart 11: Influences on Demand for Residential Property Total Tax Int Rates Demand Media Other Price/Value Economy/Confidence Credit Supply Negative Positive Note: Chart based on 114 responses Lack of Supply was the primary influence on demand, followed by credit, according to those surveyed.

12 12 Reasons for failed transactions Chart 12: Reasons most cited for failed transactions Access to credit/finance Change of mind 31% 22% Problematic Reports/Deeds/Surveys Bank/Legal Delays 16% 31% Note: Chart based on the most cited reason for 82 transaction failures Problematic reports and surveys accounted for a third of failed property transactions. Bank/legal delays also accounted for a third. Access to credit accounted for 22% of failed transactions. Change of mind resulted in 16% of failed transactions.

13 13 About the SCSI Housing Market Report 2014 The was prepared by the (SCSI). The Housing Market Survey is based on the Central Bank of Ireland & SCSI Survey of Property Professionals, which is a joint initiative by both organisations and forms the basis of the. The report is a document compiled by and reflective of the views of SCSI only. The survey results are based on 90 responses. The report is new and due caution must be exercised when interpreting the results given the low response rates for some questions particularly until the dataset is further developed over the coming quarters. Contacts: Conor O Donovan Director of Policy & Communications (SCSI) Tel: (01) codonovan@scsi.ie Disclaimer. This report was prepared by the using survey data from the Central Bank of Ireland & SCSI Survey of Property Professionals. Whilst every effort has been made to ensure the accuracy of the information contained in this publication, the Society of Chartered Surveyors Ireland does not accept liability of any kind in respect of, or arising out of, the information, or any error therein, or the reliance any person may place therein.

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15 Dating back to 1895, the Society of Chartered Surveyors Ireland is the independent professional body for Chartered Surveyors working and practicing in Ireland. Working in partnership with RICS, the pre-eminent Chartered professional body for the construction, land and property sectors around the world, the Society and RICS act in the public interest: setting and maintaining the highest standards of competence and integrity among the profession; and providing impartial, authoritative advice on key issues for business, society and governments worldwide. Society of Chartered Surveyors Ireland 38 Merrion Square, Dublin 2, Ireland Tel: (0) info@scsi.ie Advancing standards in construction, land and property, the Chartered Surveyor professional qualification is the world s leading qualification when it comes to professional standards. In a world where more and more people, governments, banks and commercial organisations demand greater certainty of professional standards and ethics, attaining the Chartered Surveyor qualification is the recognised mark of property professionalism. Members of the profession are typically employed in the construction, land and property markets through private practice, in central and local government, in state agencies, in academic institutions, in business organisations and in non-governmental organisations. Members services are diverse and can include offering strategic advice on the economics, valuation, law, technology, finance and management in all aspects of the construction, land and property industry. All aspects of the profession, from education through to qualification and the continuing maintenance of the highest professional standards are regulated and overseen through the partnership of the and RICS, in the public interest. This valuable partnership with RICS enables access to a worldwide network of research, experience and advice.