Irish real estate 2015-2016- a story of two tales
Ireland in 2015 saw both signs of improvements, but also the repeat of previous bad habit. Supply continues to be the major talking point as supply is well below the desired numbers required, Ireland has a target of 25,000 new residential developments per year. Falling well short each year with only 8,300 completions in 2014 and 11,000 in 2015.
As of Quarter 4 2015, over 27,000 new residential developments are either in the planning or building stage over 330 projects across the whole of Ireland. Since 2006 completions have gone from a peak of 93,419 down to 11,000 in 2015 (but up from 7,700 in 2014). The number of available properties has reduced in each province from 2014 to 2015, Leinster 7,600 to 6,500, Munster 12,500 to 10,000 and Connaught/Ulster 10,000 to 8,000. There is over 184,000 ghost estates currently outside of the market, either that haven’t been built yet or waiting planning permission (only 35,000 situated in urban areas) 1,400 new homes will need to built per month to meet current demand level. House completions in Ireland have always represented over 75% of total new residential development since 2006, with a peak of 90% in 2013 (7,379) and a low of 75% in 2007 (58,936).
Ireland, opposite to the rest of Europe has more people dwelling in detached or semi-detached houses compared to apartment/flats. The EU 28 saw an average of 25.6% living in semi- detached, 33.7% detached, and 41% flats. Ireland has 58.3% in detached housed but the lowest figure for apartment/flat dwellings at 5%, Spain in contract had 66.5% and Hungary 63%. The highest year of construction for housing was 2006 with 73,073, 2014 levels were down to 8,766. On the other hand, Apartments have never achieved over 25% of total construction output from 2004 to 2014. With completions reducing year on year from 2006 to 2013 (19,946 to 922), with 2014 (2,250) and 2015 (1,800). Quarter 4 2015 saw completions at 1,800 down from 2,700 in Quarter 4 2014. Planning permission is down 12% on the year reduced by almost 300 units.
The Number of completions in 2015 Quarter 1 to Quarter 3 saw Fingal (840), Cork (790) and Dublin (480) as the areas with the most activity, Carlow (140), Cavan (180) and Westmeath (140) amongst the lowest recorded levels. The only cities that didn’t see housing completions increase quarter on quarter were Donegal, Fingal, and Dublin. Construction output since 2011 has improved from 9.48 billion Euros to 12.55 Billion Euros. Leinster, Connaught and Ulster all saw their output activity up from 27% to 40%, with only Munster declining by 5% (down 1.88 billion Euros) Urban living in Ireland now accounts for over 50% of dwellers, increased year on year since the 1980’s (this is still below the EU 28 average of 75%). Leinster has accounted for over two thirds of the population growth in Ireland since the 1960’s.
Irish real estate agencies recorded over 48,000 sales transactions in 2015. These transactions were worth around 10.4 Billion Euros, with an average of 1.5% commission per sale agents would have made 159 Million Euros (average of 3,308 Euros per transaction). The average house sale across the country actuated to 220,960 Euros.
Dublin and Cork were the most active in both new homes and secondary homes, with a combined 15,283 and 5,354 transactions. Kildare was the third most active in new homes with 467 transactions and Galway for secondary homes 2,545 transactions. The least active areas where Monaghan 291 and Leitrim 373 transactions in secondary homes, whilst in new homes Westmeath 50 and Monaghan 53 transactions. 42,000 of the 48,000 transactions were secondary homes, as they dominated the market sales.
Dublin contributed 5.2 billion of the 10.4 billion, with most of the sales resulting from secondary homes (13,125 transactions and 4.6 billion Euros) Cork achieved just over the billion mark with 1.15 Billion Euros (934.5 Million Euros from Secondary homes). Leitrim and Monaghan recorded the lowest total sales numbers with 41.9 and 38.2 million euros.
Meath and Wicklow are the only cities apart from Dublin and Cork to post an average new home sales price of over 200,000 Euros at 237,744 and 289,098 (Dublin 344,103 and Cork 221,832) In comparison Longford, Cavan, Leitrim, Laois, Roscommon all had houses prices below 100,000 Euros (64,933 to 96,036 Euros). Secondary homes prices remained most expensive in Dublin at 352,781 Euros, with Wicklow and Kildare at 291,338 and 245,778 Euros. Longford, Leitrim and Roscommon experienced prices ranging from 74,281 to 90,595 Euros, meaning that you could purchase four houses for the price of a Dublin house. House prices in Dublin have risen by 2.7% in 2015 compared to 2014, with the rest of the country around 13.1%.
The rental market continues to dominate as the new mortgage laws have seen less people in a position to afford the deposits. Rents in Dublin are up from 1,368 per month Quarter 2 to 1,435 in Quarter 4 up 8% for the year, with the rest of Ireland up from 694 Euros per month to 727 Euros per month (up 10% for the year)
Dublin has 165 of the total 337 (48.96%) residential construction projects in the planning or building stage from December 2015 to February 2016, with most of the new projects costing up to 10 million Euros (the most expensive residential development being worth 2.5 billion Euros) Dublin’s overall construction output of 4.3 billion Euros, is more than all the other provinces combined with Munster 500.21 Million Euros, Connaught 87.10 Million Euros and Ulster 23.358 Million Euros (Leinster spent 665.62 million Euros not including Dublin) Cork has the second highest activity with 46 planned new residential developments and Meath (26) The least active cities in Leinster were Longford (o) , County Offaly (1) and West Meath (2).
Munster, very similar to Leinster has a majority of their new residential developments in their most populated city (Cork 46 projects) accounting for 63% of total province construction activity, followed by Limerick with 10 and Clare (7). Kerry (4), Waterford and Tipperary (both 3) had the lowest construction outputs.
Connaught’s most active city was Galway with 14 projects (51% of total province construction activity), matching the construction output of the other cities combined. Both Leitrim and Sligo have 0 new residential developments in the planning or building stage.
Ireland is the only EU 28 with almost double digit growth from 2014 to 2018 (9% to 10.10%), with only Poland close to their performance +4.90% to +7.50%. Germany, France and the UK show smaller growth year on year (-2.80% to +5.29%) The advantage to building in Ireland is cheaper costs per SQ M ranging from 1,250 to 1,750 Euros SQ M compared to the rest of EU 28 1,150 to 3,000 Euros per SQ M. Ireland’s most expensive build is high rise apartments (1,750 Euros per SQ M) and the cheapest townhouses (1,250 Euros per SQ M) similar to Germany and the Netherlands. Ireland like the UK since 2014, have some of the smallest houses in Europe, with only the UK (76 SQ M) and Finland (87.1 SQ M) below them. In Comparison Denmark (137 SQ M), Greece (126.4 SQ M) and Netherlands (115.5 SQ M) lead the way. Ireland are amongst the most rooms per house (5.2) with Belgium the highest at 5.8, Due to the number of rooms Ireland boosts the second smallest rooms (16.8 SQ M) with only the UK smaller (15.8 SQ M) Both Denmark (39.1 SQ M with 3.5 rooms) and Greece (39.5 SQ M and 3.2 rooms) are the largest.
Ireland boasts the youngest population in Europe with 53% aged from 25-64, and only 12% 65 plus, Also less Irish citizens are now leaving the country with the peak year being 2013 (52,000) and current numbers around 34,000 now, on top of this around 40,000 to 70,000 previously immigrated Irish are due to return by 2020. Ireland continues to attract lots of EU (9,000 in 2015) and rest of the world citizens (25,000 in 2015) Emigrates are currently averaging around 23 to 45,000 Euros per year.
The Irish rank 9th in the EU 28 for average monthly wages (2,129 Euros), well above the EU 28 average of 1,469 Euros. The average yearly wage stands at 35,600 Euros across 1.9 million working people, but in reality over 50% make less than 28,500 (only 35,000 people make up the top 1% of 200,000 Euros plus) Dublin employs over 40% of the total countries workforce and makes up most the top 25% earning around 40- 70,000 Euros. Both Dublin in 11th and Cork 30th both appear in the top 30 most expensive cities in Europe. The average income per area surprising doesn’t see Dublin in first place, but fourth instead (230,000 Euros per person), with the South-East (259,000 Euros), Mid- West and Midlands (around 239,000 Euros) completing the top three. The least prosperous areas are the West (186,000 Euros), the Border (190,000 Euros) and the Mid-East (210,000 Euros). Dublin accounts for 28.3% of the total income earnt, with the South West and South East at 15% and 13% (the Midlands only contributes 6%) Irish people spend the second highest amount of their wages on their rent with 34% and also have the second highest rent average 679 Euros (The EU 28 average is between 25-28%)
Mortgage draw-downs are up 6.4% for the quarter and 4% for the year, whilst first time buyers were up 4% and down 5.4% on the year with an average of 171,500 Euros (up 2.6%) Total draw-downs were up from 1,005,000 Euros to 1,284,000 Euros. In 2006 mortgages peaked at 114,600 and a total value of 32 billion Euros. The Central Bank is looking to lend closer to the 8 billion Euro mark by the end of 2016, and presently just over the 4 billion mark (4.7 billion and 26,756 transactions) 29% increase on 2014 and a projected 11% in 2016. Ireland is now preforming well above its low of 2011 with only 12,900 applications similar to 1970’s numbers. Quarter 1 2014 to Quarter 1 2015 Ireland was the worst performing EU 28 country with -13% available credit, only beaten by the Ukraine -32%, the best EU 28 performers being Sweden (+4%), Estonia (+3%), Norway (+3%) and Malta (+2%). Cash buyers have a strong representation of all transactions with 46% in 2015, with 8,103 out of 12,065 completed in quarter 4 2015. Housing loan approvals are down from 6,799 in Quarter 2 to 6,131 in Quarter 4 20% reduction on the year, re-mortgages are up 19% on the quarter and 53% on the year (797 to 993).
The Irish Banking Federation reported first time buyers borrowed 1.685 Billion Euros over 10,000 transactions Quarter 1 to Quarter 3 2015, compared to 1.877 Billion Euros over 11,476 transactions over the whole of 2014. First time buyers were purchasing houses valued around 220,000 Euros first 2 Quarters, by the end of Quarter 3 this increased to 250,000 to 280,000 Euros. Daft.ie reported Dublin 10 and Dublin 8 (5.8% to 24.5%) saw the strongest price growth, Dublin 6 the biggest loser (-4.38% to -5.7%). Outside of Dublin, Cavan, Clare and Cork (15.7% to 26.1%) produced the highest average house prices.
Repossessions in 2015 there were over 1000 by Quarter 3 2015, around 60 per week up 200% on 2014 with only 313 over the whole of 2014. Cork had the most repossessions with 123, Dublin 116, Wexford 68, Sligo only had 7. Banks have over 7,000 outstanding mortgage repossessions going through the courts according to the Irish Mortgage Holders Association. Dublin has the most outstanding with 1,673, Cork 627, Meath 607, whilst Longford 100, Carlow 116, and Leitrim 75 the least active courts. Ireland presently has over 38,000 homes with rents over due by 720 days or above, 18,000 from 361 to 720 days and 12,000 from 181 to 360 days.
Produced by Matthew Scott
Acquaint Commercial Senior Sales Manager
Email: [email protected]