House asking prices rebound but will likely fall again - MyHome

Industry research suggests that asking prices on the housing market bounced back strongly as much of the economy continued to reopen between July and September.

The average 5.1 per cent annual rise recorded in third quarter figures in a report from the myhome.ie website may, however, have just been another “aberration” caused by the impact of Covid-19, the report’s authors said.

The "surge" in Q3 asking prices in the report, which was produced in conjunction with stockbroker firm Davy, was more pronounced outside Dublin than in the capital, where the year-on-year increase was 2.5 per cent, barely half the rate recorded elsewhere.

Myhome.ie, which is owned by the company that publishes The Irish Times, said that despite the economic crisis caused by Covid-19, the website recorded its busiest ever month for traffic in July.

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The report’s authors suggested the economic slump has had a “limited affect” on demand to buy houses. This is because most of the sectors feeling the brunt of the impact, such as retail and hospitality, traditionally have higher levels of renting and are less important in driving purchasing activity.

Stock levels down

"Our latest consumer sentiment survey conducted in August showed that 71 per cent of prospective buyers expected to buy in the next year," said Angela Keegan, managing director of Myhome.

“This shows that buyers appear to have largely been unaffected by Covid-19’s economic impact. On the supply side, meanwhile, stock levels are down 25 per cent compared with this time last year. This combination has led to asking prices being driven upwards.”

Conall MacCoille, Davy’s chief economist, said previously that a fall in asking prices of almost 3 per cent recorded during the lockdown-hit second quarter was an “aberration” caused directly by the effects of the pandemic.

“The same is likely true for the plus 5 per cent recorded in Q3. The truth probably lies close to the middle of these two readings,” he said.

He said the reason for the Q3 rise in the annual figures lies in the fact that that July to September is normally a weak period for pricing in the housing market, capturing the end of the summer season. With some pent-up demand caused by the constraints of lockdown and subsequent a “surge” in Q3 activity, the annual performance was flattered compared to last year’s normal weak period.

“Asking price inflation will likely fall back in Q4,” he said.

Approvals rebound

There was a quarterly rebound in mortgage approvals after lockdown in the third quarter to €670 million, but this was still down by roughly a third on the same period last year. Mr MacCoille estimated that transaction volumes in the period were down by about 37 per cent, which is only slightly better than the 40 per cent decline between April and June.

The average mortgage approval in the quarter was €247,000 per application, which is up 4 per cent year-on-year. Mr MacCoille said this may have been because weaker and lower income applicants were weeded out of the system as many people among that cohort may have been excluded because they were on pandemic unemployment payments.

The Myhome statistics showed that asking prices were up on an annual basis in 19 counties in the third quarter, including Dublin and most of the western seaboard, down in five counties, including Monaghan with an 8.3 per cent drop, and flat in Meath and Kildare.