House price inflation accelerated again in the first quarter on the back of what the State’s largest estate agent said was “a chronic lack of supply in the second-hand market”.
Sherry FitzGerald said asking prices for second-hand homes nationally rose by 2 per cent between January and March and were up by 5.1 per cent on an annual basis. This compared with annualised growth of 3.6 per cent this time last year.
In the capital, asking prices for second-hand homes rose at an even swifter rate of 2.1 per cent during the quarter, while price inflation outside Dublin increased by 1.9 per cent.
“One of the key factors sustaining this strong price growth is a chronic lack of supply in the second-hand market,” Sherry FitzGerald managing director Marian Finnegan said.
In January, just 11,050 second-hand properties were listed for sale “representing a mere 0.6 per cent of the entire private housing stock in Ireland, with rural and regional Ireland disproportionately affected,” she said.
The company has been predicting house prices nationally to rise by 2-3 per cent this year. Ms Finnegan said an extreme shortage of stock in the first quarter drove an acceleration in asking prices but “we expect the pace of inflation to moderate somewhat” as more supply comes on stream.
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Sherry FitzGerald’s latest quarterly report on the residential market here noted there were almost 60,200 housing transactions in 2023 (excluding block sales and homes acquired for social housing), up 1.1 per cent on the previous year.
Activity in the second-hand market saw a minor reduction, with about 49,650 units sold in 2023, a reduction of 50 units transacting when compared with 2022, it said.
The company said the shortage of second-hand stock in rural counties such as Longford, Kerry, Roscommon and Donegal saw transaction activity in the second-hand market decline by more than 8 per cent.
Conversely the company said the new homes market witnessed a modest uptick in transaction activity last year, with 10,550 transactions recorded in the year, a 7 per cent increase on the previous year, with Dublin and its commuter-belt counties Kildare, Meath and Wicklow accounting for more than half (56 per cent) of transaction activity.
In its report, Sherry FitzGerald again highlighted the exodus of landlords from the market, noting that in the first quarter just 12 per cent of purchasers of second-hand homes with the company were investors, while 35 per cent of vendors were investors selling their properties.
“While it is anticipated that house completions levels will improve again this year, the desired V-shaped recovery in supply has not occurred,” Ms Finnegan said.
“As such the deficit in supply is likely to persist. This shortage in new supply has had a ripple effect, adversely affecting the supply of other properties to the market. This pattern is particularly noticeable in more rural locations, as is evidenced in contracting transaction volumes,” she said.
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Suzhou, in eastern Jiangsu province, said this week that it would waive its “home buying eligibility check” for prospective buyers, which previously limited the number and location of houses an individual or a family could purchase in the city, based on their social insurance, personal income tax and residency status.
Buyers from across the nation will be allowed to buy both pre-owned and new homes in any of Suzhou’s six districts, the city’s housing department told the Post on Wednesday.
“Waiving purchase eligibility checks is the biggest possible relaxation to existing restrictions,” said Yan Yuejin, director of Shanghai-based E-house China Research and Development Institute. “The new rule also amplifies and upgrades September’s 120-square-metre (1,290 sq ft) rule. Now, buyers can purchase houses of any size in Suzhou without any restrictions.”
The move comes as home prices in major Chinese cities fell at the fastest pace in nearly nine years in December. Prices of new homes in 70 medium and large cities eased 0.4 per cent month on month in December, following a 0.3 per cent decline in November, according to official data.
China home sales to disappoint in January, may fall by up to 15 per cent in 2024
China home sales to disappoint in January, may fall by up to 15 per cent in 2024
Suzhou, a city of more than 12 million residents, has previously experimented with similar measures. Last September, the municipal government said non-residents could enjoy the same qualifications as residents for buying property. Both groups could buy a maximum of three homes with areas of 1,290 sq ft or less. For larger houses, the cap was removed.
Shanghai and Guangzhou rolled out similar easing measures.
Shanghai’s housing ministry said on Tuesday that individuals who have paid income tax or social insurance in the city for at least five years in a row would be immediately eligible to buy one house in select districts, regardless of their residency status. The previous rule stipulated non-residents to be married to qualify for property purchases.
The change was intended to “satisfy residents’ reasonable housing needs and promote work-life balance across districts, in addition to facilitating the integration of cities and industries,” Shanghai’s housing ministry said in a social media post.
The Guangzhou government removed buying restrictions for houses measuring 1,290 sq ft or less on January 27.
“2024 is an important year for wholesale relaxation around housing purchases,” said Yan. “This is fundamentally different from the ‘local relaxation’ that we saw in 2023.”
The latest round of relaxations could prove to be the tonic China’s property market needs this year, he added.
Additional reporting by Yulu Ao