The recent trend of lower house price inflation seems to be continuing apace according to the CSO (Central Statistics Office) figures.
Based on national figures, the last six months has seen house price inflation fall from 8.9% in August 2018 to 5.6% in January 2019 based on YTD figures. Nowhere in this 6 month period has there been a blip with a consistent pattern emerging of lower house price inflation.
The fall is a reflection in a number of factors – residential property prices have recovered about 80% of their losses from the 2008 property price crash with the volumes more than doubling since the trough of 2012 when 20,680 transactions were recorded compared to 44,459 in 2018.
Central Bank lending limits and deposit requirements are also playing their part, an intentional policy to try and limit the self inflicted damage caused by lax lending policies in the past.
In Dublin, just a 1.9% increase in residential property prices was recorded in the YTD January 2019 with the remainder of Ireland still showing a 9.5% based on a YTD January 2019. However it’s a shame that the indexes aren’t more location specific to help gauge market movement in local areas.
There’s unlikely to be such demand for the Household Credit Market Report that it crashes the Central Bank’s servers but nonetheless, some bean counting Bobs and Julies certainly put a lot of effort into telling us how indebted we all are.
What’s interesting about the report is not the headline stats – everybody with an eye on the property market could probably guess that new mortgage lending has increased but it does quantify it – it stood at €2.01 billion in Q2 2018, a 22% increase since Q2 2017.
We could also take a guess that the average first time buyer mortgage in Dublin in H1 2018 is larger than elsewhere in the country, standing at €273,953 vs €185,987 which is quite a significant difference (47%) even taking into account the wage differential between FTBs in Dublin and outside the capital – €85,334 vs €66,728 (a 28% difference).
But in terms of the human cost, the report paints a picture of longer mortgage terms taken out at a later stage in life than before. The average FTB mortgage had a term ranging around the 30 year mark and the average age was around 34 years old when it was drawn down. In fact, around half of all FTBs had mortgage terms ranging from 30-35 years in H1 2018, meaning many people may be approaching retirement or already retired before their mortgages are fully paid off.
However, the numbers on longer loan terms has fallen since the ‘boom’ – perhaps reflecting both lower house prices or tighter lending criteria when you consider that in 2006 which was just before the property crash that just under two thirds of FTBs had loan terms of over 30 years.
Mortgage arrears have also decreased. In Q2 2018, there were 63,402 mortgages in arrears (over 90 days past due) which accounted for 7.5% of all mortgage loans. This has fallen since the dark days of the property crash when in Q3 2013, 14.2% of mortgage loans were in arrears. The highest rates of mortgage arrears 90 days past due occurred in the border counties – Donegal, Leitrim and Cavan with Longford also featuring.
So where does that leave us? Basically, most FTBs are in their 30s and taking on longer mortgage loan terms when they manage to purchase a house with those in Dublin having to pay more for their homes as well. The slight good news is that mortgage arrears have dropped although the ratio still works out at approximately 1 in 13 mortgages experiencing difficulties which is still a huge financial and human cost for those involved.
Not many people are aware but it is now possible to track property prices using the Eircode system. Like many things property related, the averages it gives are pretty much useless if you want a specific value for your property but in terms of seeing overall trends in property prices for a given area, it can be quite useful.
Regarding Cork, the Eircode system is broken down into a few specific areas – For example, P25 covers the Midleton area, P36 the Youghal area, P24 is Cobh whereas T12 and T23 covers Cork (city) southside and northside respectively.
If we visit the CSO website and track prices by Eircode, the most recently available data tracks the median house price in the year to April 2018. It’s important to remember that the CSO uses median values rather than mean values to calculate the Eircode figures. If you don’t know the difference between mean and median, kindly follow this link for a quick summation. Anyhow, the median property prices for Midleton, Youghal and Cobh are given as follows
Median property price Midleton – €200,000
Median property price Youghal – €148,000
Median property price Cobh – €185,000
Taking the Cork city divide of Southside / Northside, the median house price shows quite a dramatic difference between the two areas having a 43% difference which equates to €80,000;
Median House price Cork City Southside – €265,000
Median House price Cork City Northside – €185,000
In comparison, the median national house price is given as €233,000.
The CSO also breaks down the purchasing figure into the buyer type – first time buyer owner occupier, former owner occupier and non occupier. The titles may be a bit lethargic in description but fulfill their job admirably and the illustration demonstrates the buyer breakdown for three areas – Midleton, Youghal and Cork City Northside.
Finally, the CSO page also shows volume of sales by month per Eircode area ranging from January 2010 to the most recently available April 2018.
If you’re a bit of a numbers geek like us, the CSO website gives all sorts of interesting information and is regularly updated as data becomes available. To finds the average house price in a specific Eircode area, just follow this link and locate your area