BPFI Housing Market Monitor Report Explained

The Banking & Payments Federation Ireland released their latest Housing Market Monitor report today. It consisted of many different numbers and statistics that will be explained in this blog.

Ireland has consistently seen a large influx of newcomers recently. In the first quarter of 2019, it was reported that the number of housing commencements increased by 31.6% compared to the first quarter of 2018. Additionally, 5,800 housing commencements were registered during that same time period. These numbers are good signs for the Irish people. An increase of new construction will help out with the shortage of houses available and allow for a continually growing economy.

In response to the increase in number of housing projects, one would also expect the number of mortgages given out to increase as well. Mortgage approvals grew 9.2% in the first quarter, while mortgage drawdowns increased by 8.9%. Increase in the number of mortgage approvals can raise some red flags. Mortgage defaults can be deadly for both parties involved, however, with Ireland’s growing economy, defaults should not be an added worry.

The major increases in new building projects has helped steady out the residential property prices. The year on year property prices increase by a slim 3.9%. That percentage was the lowest rate of annual growth since 2013.

Economist, Ali Uğur, made his own interpretation to the new report that was published. He focused his study on the increase in activity for the non-household sector within the housing market. Many companies such as pension funds, specialist private rental firms, and Real Estate Investment Trusts have taken over the domestic residential property market as investments. This growth will help with the need for available housing within Ireland. Ali Uğur stated, “This in a way shows that, to a significant extent, buy to let sector investors which have been traditionally individual investors have been replaced by institutional investors in the Irish housing market over the last 10 hears, particularly in the new apartment sector.” The one precaution that Ali Uğur urged was making sure that there was a mix of different housing options. Ireland’s more populated cities are becoming very expensive to live in and investors need to be aware about the varying level of social classes.

The report showed great progress for the future of Ireland’s housing market by lessening the shortage of properties for sale and steadying the increase of property prices. Economist, Ali Uğur, had some mixed opinions about what the report presented, but overall is optimistic for the future of Ireland’s housing market.

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