Property prices rose in July in Ireland

Residential property prices rose in Ireland in July. This is according to the latest statistics released from the Central Statistics Office. In the year to July, residential property prices at a national level, increased by 2.3%. It compares with an increase of 1.2% in June and a decrease of 13.6% recorded in the twelve months to July 2012.
Residential property prices grew by 1.2% in the month of July. This was the same as the increase recorded in the previous month and compares with an increase of 0.2% in July of last year.
Unfortunately, this is about as good as the property news in Ireland gets. The rise in property prices is only a mirage made possible by magic of statistics. In reality, the property market here is being driven by an incredibly low-level of transactions and cash buyers.
The missing ingredient in the Irish property market is mortgages. So far in 2013, there is little evidence that banks are returning to lending, despite repeated promises they would do so in 2013. In the first two quarters of this year, the level of lending for property purchases is lower than 1973. So far this year, almost 8% fewer actual mortgages have been granted for the purchase of a property in Ireland than at the same point in 2013. This is despite the return of former market leader in residential mortgages, Permanent TSB and an increase in loan-to-value limits by KBC (it now lends up to 90% of the value of a property).
If current lending trends continue and even if there is a surge of lending in the second half of 2013, it will be difficult for banks to exceed the 16,286 loans that were drawn down way back in 1973. To do so, banks will need to lend slightly less than 6,000 mortgage units in both Q3 and Q4 simply to just draw even with the numbers from 40 years earlier. This is a tall order for a banking sector that is still reducing staff numbers and branch services.
The Irish property market cannot recover in any meaningful way before then. In the meantime, new lenders are urgently needed that will provide the market with sustainable lending and sustainable loans.

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