Residential Property Price Report - Quarter 3, 2017

Transcription

1 Residential Property Price Report - Quarter 3, 17 Theme Approximately 94 per cent of respondents anticipate national price increases across the medium-tolong term time horizons. The median degree of expected price inflation for National and Dublin areas are 8 per cent (+1 Year) and per cent (+3 Years) Supply of units (2 nd hand and new) constitute the primary factors behind anticipated price increases Low Housing Supply Catalyst for Further Property Inflation The Q3 17 survey shows that both Dublin based and regionally based agents are forecasting property prices will continue to increase across +1 year and +3 year time horizons. The forecasts suggests a slightly conservative estimate of property price inflation of +8% in one years time compared with current price inflation trends as reported by the CSO of +12%. It is clear from the latest results of the SCSI/CBOI report that the lack of both new and second hand properties is a lead result for house price inflation. There is a net balance +36% of respondents indicating that property prices will increase when asked about the next 3 months of 17, compared with 2 years ago. Interestingly, a net balance +18% of Dublin respondents are forecasting property prices to increase in the next 3 months compared with 2 years ago. This may suggest that property prices in Dublin will increase at a slower pace compared to those properties in outside of Dublin.

2 Chart 1: Expected movement of residential property prices (National): 14Q4 to 17Q3 +3 years 14Q4 Q2 Q4 16Q2 16Q4 17Q2 +1 year Q1 Q3 16Q1 16Q3 17Q1 +1 Qrtr. 17Q3 14Q4 Q2 Q4 16Q2 16Q4 17Q2 Current Qrtr Q1 Q3 16Q1 16Q3 17Q1 17Q Increase Unchanged Decrease share of respondents (%) Note: Chart provides details of the results from the past 12 surveys (14Q4 to 17Q3). Number of observations vary from survey to survey. Chart 2: Expected movement of residential property prices (Dublin): 14Q4 to 17Q3 +3 years +1 year +1 Qrtr. Current Qrtr 14Q4 Q2 Q4 16Q2 16Q4 17Q2 Q1 Q3 16Q1 16Q3 17Q1 17Q3 14Q4 Q2 Q4 16Q2 16Q4 17Q2 Q1 Q3 16Q1 16Q3 17Q1 17Q Increase Unchanged Decrease share of respondents (%) Note: Chart provides details of the results from past 12 surveys (14Q4 to 17Q3). Number of observations vary from survey to survey.

3 share of respomdents (%) share of respomdents (%) Chart 3: Expected movement of residential property prices over a 1 Year time horizon: 17Q3 Chart 4: Expected movement of residential property prices over a 3 Year time horizon: 17Q share of respomdents (%) share of respondents (%) increase no change decrease increase no change decrease Note: Number of observations for each region included in brackets. Note: Number of observations for each region included in brackets Expected Direction of Price Change The median degree of expected national house price appreciation for the +1 and +3 Year time horizons has remained the same as in the previous survey (8 and per cent, respectively). Expectations for Dublin have decreased to 8 per cent for the +1 Year time horizon and stabilized at per cent for +3 Years to match the national figure. The results of the survey are similar with the findings of a similar survey carried out for the 17Q3 Daft.ie Irish House Price Report. According to the latter, in excess of 1, property-market participants expect house prices to be 6.6 and 8.3 per cent higher nationally and in Dublin respectively in one year s time.

4 median anticipated change (%) median anticipated change (%) Chart 3: Median expected change in National residential property prices over a 1 Quarter, 1 Year, and 3 Year time horizon Chart 4: Median expected change in Dublin residential property prices over a 1 Quarter, 1 Year, and 3 Year time horizon Q3 Q1 Q3 16Q1 16Q3 17Q1 17Q3 14Q3 Q1 Q3 16Q1 16Q3 17Q1 17Q3 14Q3 Q1 Q3 16Q1 +1Quarter +1Year +3Years time horizon 16Q3 17Q1 17Q3 median anticipated change (%) Q3 Q1 Q3 16Q1 16Q3 17Q1 17Q3 14Q3 Q1 Q3 16Q1 16Q3 17Q1 17Q3 14Q3 Q1 Q3 16Q1 +1Quarter +1Year +3Years time horizon 16Q3 17Q1 17Q3 median anticipated change (%) Note: Chart provides details of the results from the past 13 surveys (14Q3 to 17Q3). Number of observations vary from survey to survey. Note: Chart provides details of the results from the past 13 surveys (14Q3 to 17Q3). Number of observations vary from survey to survey. FACTORS UNDERLYING HOUSE PRICE EXPECTATIONS The primary factors said to be influencing expectations surrounding house price developments nationally relate to the supply of housing units (second-hand & new) which represent a combined 64 per cent of total primary responses. The availability of second-hand stock was also cited as the primary factor for both Dublin and Non- Dublin markets (36 and 4 per cent respectively). In Dublin, Other issues (27 per cent) were selected as the second most prevalent condition with interest rates and the perception of value being the driving subcomponents of this factor. Economic conditions were another key influencer of house price expectations cited by a per cent of non-dublin respondents.

5 NON-DUBLIN DUBLIN NATIONAL number of respondents per cent of respondents per cent of respondents Chart 7: Top 3 factors influencing expectations of house price developments: 17Q3 Chart 8: Number 1 ranked factor influencing expectations of house price developments): 17Q number of respondentse National (7) Dublin (22) Non-Dublin (39) nd hand stock Cons. new units Bank credit Macropru. rules Economy Other 1st Factor 2nd Factor 3rd Factor Note: Chart based on 226 observations from 77 respondents. Note: Number of observations for each region included in brackets. Other includes; value, rental market developments, FX movements and interest rates Chart 9: Primary factor influencing expectations of house price developments (National, Dublin, and Non-Dublin): Q4-17Q3 Q4 Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 % % % 3% 4% % 6% 7% 8% 9% % Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 % % % 3% 4% % 6% 7% 8% 9% % 2nd hand stock Cons. new units Bank credit Macropru. rules Economy Other Note: Chart provides details of the results from the past 8 surveys (Q4 to 17Q3). Number of observations vary from survey to survey. Activity Level vs Previous Quarter In terms of sales activity, a PMI-style index is constructed which applies differing weightings placed on the sales categories of instructions, enquiries, agreed, and completions. A value above signifies an expansion of activity. The latest survey shows a decline in national and Dublin following a decline in slowing down in sales agreed and completions. Growth is evident in the non- Dublin region for the third consecutive quarter with an increase to 7.

6 Index Index Index Index Chart Q-on-Q Index of residential market sales activity Chart 11: Q-on-Q Index of residential market sales activity: Sales Completed Q1 Q2 Q3 Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 Q1 Q2 Q3 Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 National Dublin Non-Dublin National Dublin Non-Dublin Note: Values of signify no change in construction activity on the previous month. Values above signify an expansion of activity, while those below signify a contraction. Chart provides details of the results from the past 12 surveys (14Q4 to 17Q3). Number of observations vary from survey to survey. Note: Values of signify no change in construction activity on the previous month. Values above signify an expansion of activity, while those below signify a contraction. Chart provides details of the results from the past 12 surveys (14Q4 to 17Q3). Number of observations vary from survey to survey.

7 DUBLIM per cent of respondents per cent of respondents NATIONAL Factors Influencing BTL Properties For Sale Respondents consider a rise in the number of residential investment units coming onto the market to be primarily driven by property owners coming out of negative equity. This response amassed 3 per cent on a national basis, and 42 per cent for Dublin. Chart 12: Primary factor influencing the number of BTL properties coming onto the market (National and Dublin): 17Q3 Chart 13: Primary factor influencing the number of BTL properties coming onto the market (National and Dublin): 17Q1-Q Q1 17Q Q Q1 17Q2 17Q3 Negative EquityPressure to sell Rent legislation Low rental return Other % % % 3% 4% % 6% 7% 8% 9% % Negative Equity Rent legislation Pressure to sell Low rental return Other National Dublin

8 share of respondents (%) share of respondents (%) number of respondents APPENDIX Chart A1: Regional distribution of respondents Chart A2: Number of residential units sold in the 17Q3 DUB (22) small (lhs) medium (lhs) SE (12) large (lhs) W (9) MW () MD () BDR () ME (3) SW (2) number of respondents NATL (14) 1 to 6 to 11 to 16 to 21 to 3 31 to 1 to 7 76 to Over 2 3 per cent of respondents number of properties sold Note: Chart based on 77 full or partial responses Note: Chart based on responses from 68 respondents who gave details of their levels of sales. Chart A3: Extent of expected 1 Year change in residential property prices: National and Dublin Chart A4: Extent of expected 3 Year change in residential property prices: National and Dublin share of respondents (%) National Dublin National 8 Dublin extent of expected house price change (%) extent of expected house price change (%) Note: Chart based on 1 and 21 responses to the question on national and Dublin expectations respectively Note: Chart based on 49 and 19 responses to the question on national and Dublin expectations respectively

9 Background The Society of Chartered Surveyors Ireland / Central Bank of Ireland (SCSI/CBOI) Residential Property Price Report is informed from a quarterly sentiment survey of estate agents, auctioneers and valuation surveyors, as well as those with a more indirect interest in the industry such as economists, market analysts and academics. While the main focus is on participants house price expectations, it also canvasses opinion on the factors underlying these and on the level of sales activity. The survey is a snapshot of respondents expectations at a particular point in time and so can provide only limited information about possible future property price developments. The survey also provides a measure of uncertainty regarding those expectations, which is a useful complement to the available information on the domestic property market. Methodology Response Rate The 17Q3 Central Bank of Ireland/Society of Chartered Surveyors Ireland Survey of Property Professionals was conducted in October 17. The survey received 77 full or partial responses, in comparison to in 17Q2 and 62 in 16Q2. Questions 1. How do you perceive/anticipate national residential property prices to have changed/change in: a) The previous quarter b) The forthcoming quarter c) One year ahead d) Three years ahead (Increase/ No Change/ Decrease; Range) 2. How do you perceive/anticipate residential property prices in your region to have changed/change in: a) The previous quarter b) The forthcoming quarter c) One year ahead d) Three years ahead (Increase/ No Change/ Decrease; Range) 3. What are the three main factors influencing your expectations of house price developments? (Availability of 2 nd hand stock, Availability of bank credit, Central Bank macroprudential rules, Changes in demographics/population, Construction of new residential units, Foreign exchange rate movements, Performance of the economy, Perception of value, Level of interest rates, Level of taxation / fiscal policy, Other, Media coverage, Rental market developments) 4. Approximately, how many residential properties has your firm sold in 17Q3?

10 (Range). Compared to the previous quarter, how would you describe the following aspects of your firm's residential property related sales activity in the current quarter? (Instructions, Enquiries, Agreements, Completions; Range) 6. What are the three main factors why residential investment units are coming onto the market? (Landlords coming out of negative equity, Net rental returns too low, Rent legislation is too complex and restrictive, Not enough rental demand, Pressure from lending institutions to liquidate assets)