Irish residential property prices – latest roundup

As we now have the usual quarterly troika of Irish residential property price surveys from DAFT.ie, Myhome.ie and Sherry FitzGerald, this entry is a roundup to see what the surveys are telling us.

(1) Prices dropped 3-4% in quarter one of 2011 and 13-15% in the last year. My personal opinion for the little it’s worth is that the decline would have been greater were it not for the reduction in stamp duty for non-first-time buyers which was effected at the start of December 2010 but I think  will have impacted prices particularly after the Christmas period. Stamp duty rates typically fell from 7% on the difference between the property value and €125,000,  to 1% of the property price – so for a €250,000 home the stamp duty is now €2,500 compared to €8,750. In a normal market where existing prices were in equilibrium this would have tended to push house prices up so that the total price remained the same. Note that first time buyers which comprise an estimated 45% of the mortgage market saw their stamp duty rate go from 0% to 1%. So that will have tended to depress house prices but because first time buyers would be expected to comprise far less than 45% of the total market (including cash transactions), I still think the stamp duty changes should have tended to increase prices and I think that 3-4% decline recorded is an aberration and would be higher in normal circumstances.

(2) Prices are 36-43% off peak according to Myhome/DAFT and 51-55% off peak according to Sherry FitzGerald.

(3) Although price drops aren’t accelerating they’re just about moderating but at 10%+ annual declines.

In terms of how the different sources compile their statistics this is what each has to say.

(1) DAFT.ie : Its index is based on properties advertised on Daft.ie for a given period. The regressions used are hedonic price regressions, accounting for all available and measurable attributes of properties and only coefficients with a very high degree of statistical significance (p < 0.001) are used. The average monthly sample size for sales during 2009 was over 10,000. Indices are based on standard methods, holding the mix of characteristics constant, with the  annual average of 2007 used as the base. A working paper on the methodologies employed in both rental and sales markets will be published on the Daft.ie website soon. Stock and flow statistics are calculated using consistent series for the period covered.

(2) Myhome.ie : Its index is based on actual asking prices of properties advertised on MyHome.ie with comparisons by quarter over the last six years. This represents the majority of properties for sale in Ireland from lead­ing estate agents nationwide.  The series in this report have been produced using a combination of statistical techniques. Our data is collected from quarterly snapshots of active, available properties on MyHome.ie. Our main National and Dublin indices have been constructed with a widely-used regression technique which adjusts for change in the mixture of properties for sale in each quarter. Since the supply of property in each quarter has a different combination of types, sizes and locations, the real trends in property prices are easily obscured. Our method is designed to reflect price change independent of this variation in mix.

(3) Sherry FitzGerald : Its index is based on the analysis of a basket of properties in its locations nationwide.  Commencing in 1996 in the Dublin market, it was extended nationwide in 1999. Each basket of properties was chosen based on a weighted profile of properties in each location.  The basket extends to over 1,500 properties, which are re-valued on a monthly basis for Dublin properties and a quarterly basis for nationwide properties with results produced quarterly. The basket is held constant and re-valued based on market evidence.  Sherry FitzGerald through its franchise network is represented in every major city, town and county in Ireland.

So two of the above are asking price indices and the Sherry FitzGerald is a valuation assessment index (akin to how SCS/IPD and JLL compile the commercial property indices as far as I can see)

Note Ireland has two actual sale price series, one from the Department of the Environment Housing and Local Government which is an atrociously crude average of mortgage transactions and is issued six months after the event; the other from Permanent TSB/ESRI is issued quarterly – next one due in the next fortnight for Q1, 2011 – and is an hedonic index but only based on PTSB mortgages and PTSB has less than 4% of the Irish new mortgage market. NAMA has recently said that prices were down an average of 50% from peak in November 2009, 16 months ago. There is no word on the immediate intentions of the new government on the House Price Database – the legislation is drafted in the Property Services (Regulation) Bill amendment and Fine Gael indicated it would pick this legislation up and progress it but there has not been any progress in the past three weeks.

In terms of outlook, who knows? These are the latest predictions/projects captured on here which I believe to be a comprehensive reflection of reported predictions and projections.