Gurdgiev: Irish Residential Property Prices: Q3 2014

by Bregs Blog admin team

house-prices-on-the-rise

We table the following post from Dr. Constantin Gurdgiev’s blog “True Economics” to explore current residential price issues. As readers of the BRegs Blog are aware we are keen followers of Mr Gurdgiev as he tends to “drill down” into actual figures and frequently gets beyond spin and other anecdotal commentaries on topics. Link to: True Economics: 23/10/2014: Irish Residential Property Prices: Q3 2014

Although not directly related to building regulations house prices are one ingredient contributing to a perceived housing crisis at present, along with new building regulations, increased costs and lower commencement levels.

When viewed alongside the continued fall in commencement notice levels and CSO figures confirming falling residential construction output, the house price and rental cost increases may continue due to lack of supply and continuing demand.

Extract:

Thursday, October 23, 2014

23/10/2014: Irish Residential Property Prices: Q3 2014 data

Latest data for residential properties price index for Ireland is out, covering September. Instead of repeating all the analysis provided elsewhere, here is a look at quarterly data series and longer-term comparatives.

Firstly, on quarterly basis, Q3 2014 ended with index averaging at:

  • 79.1 in Dublin, up strongly on Q2 2014 reading of 72.0. This brings property prices to the levels of Q2 2010 or on pre-crisis comparative basis close to Q4 2002 (80.8).  Year on year prices in Q3 2014 stood 23.9% above Q3 2013 reading, which is a modest increase on Q2 2014 y/y increase of 21.2%.
  • Outside Dublin, index read 71.4 in Q3 2014, marking a rise of 5.8% y/y. In Q2 2014, y/y increase was 2.2%. Outside Dublin prices are currently trending at the levels comparable to Q1 2012 (71.2) and on pre-crisis basis – at the levels between Q2-Q3 2001
  • National prices index is at 76.9, up 14.4% y/y and this compares to a rise y/y of 10.6% in Q2 2014. National prices levels are around Q2-Q3 2011 averages and on pre-crisis basis these are up at the levels of Q2-Q3 2002.

Chart to illustrate:

chart 1

Rates of growth in prices are worrying, as they were for some time now. Chart below shows y/y increases in price indices for quarterly averages:

chart 2

The chart above clearly shows that Dublin price increases have been running well above the historical averages for the main periods since Q1 2000. Q3 2014 marks full year since price appreciation in Dublin market has risen above sub-period (2013-present) average and this now becoming a serious issue.

At the same time, long-term level indices suggest that prices remain below historical trends:

chart 3

So once again, data is showing troubling developments in the rate of price increases in Dublin and below-trend price levels. Based on historical evidence, real price bubble concerns are still outside the scope of index readings by some 25-30 percent. But we are closing that gap very fast.

Other posts of interest:

Residential construction down in 2014 Q1+ Q2: (CSO statistics)

Commencement Notices – Update | 22 October 2014

A ‘perfect storm’ for housing? 

Karl Whelan: “…raft of cost-increasing building regs are at least partly responsible”

FAO Committee on Environment, Culture and the Gaeltacht- commencement figures

Construction Recovery- watch this space

‘Recovery’ is Still Worse than the 1980s Crisis

CSO: (Q1 2014) planning permissions for dwellings -30% drop

Minister Hogan rejects Irish Times Article

Irish Times: Dramatic fall in number of buildings being started

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