Irish Property Price Growth Easing Towards a Sustainable Pace


Residential property price data for July suggest Irish housing prices continue to increase but the annual pace of increase continues to ease.

The July data also show a somewhat faster monthly increase in prices outside Dublin as has been the case in 7 of the past 9 months, suggesting the recovery is becoming more broadly based.

The 0.9% monthly gain in July is the strongest monthly gain since March and prices have increased on a monthly basis in each of the past five months following declines in the first two months of the year. So these data  confirm positive momentum in prices. That said, the rate of house price growth has been trending slower from the dramatic (and unsustainable) monthly increases seen in these data through the summer and autumn of 2014. As a result,  the year on year increase has eased further in July  to 9.4%, the first time it has been below double digit since April of 2014. We expect this process to continue in the months ahead. This means that while the annual average increase in residential property prices for 2015 as a whole will be about 9.5-10%, the end year increase could be in the region of 4%.

With employment increasing strongly and after-tax incomes also set to move onto a notably healthier trajectory, we see residential property prices rising by about 5-6% in 2016. That is broadly consistent with the annualised monthly gain seen over the past three months. The link between residential property prices and a generally healthy Irish economy is underlined by the diagram below. Separately today, the Central Statistics Office published jobs data for the second quarter of 2015 that show the fastest annual gain in fulltime employment(+4.0%) since the first quarter of 2007. As the diagram below indicates, trends in the Irish jobs market and property market have followed broadly similar patterns through the downturn and subsequent recovery.

This non-exhaustive information is based on short-term forecasts for expected developments in the economy and financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalised investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a judgment as of the date of the report and are subject to change without notice.