Shortage driving up prices

BY TONY KAVANAGH

The past year has proven to be a turning point for the Galway housing market – after six years of falling prices, price inflation has re-emerged, most notably in Galway City.

The first nine months of 2013 saw the first period of positive annual price growth in the Galway housing market since 2006. Early indications suggest that the Galway City market has grown by more than 10% during 2013 [certain areas of high demand in the city]. The strength of price growth in Galway City is fuelled by a shortage of supply.

According to the latest figures from the Department of the Environment, 6,507 housing completions were recorded for the first ten months of 2013 in Ireland.

This represents a 5% decline when compared with the same period of 2012. Notably, Galway overall accounts for just 6.4% of the total; a historically low level of activity. 

With a dearth of new construction activity, the market is particularly focussed on the quantity of stock that is actually for sale. 

The perfect storm of negative equity, tracker mortgages and no bridging finance has negatively impacted the quantity of second hand properties available for sale in the country overall and notably so in Galway city.

As of July 2013, there were 3,173 residential units available for sale in Galway; but only 1.6% of the private stock in Galway City is available for sale. Such figures suggest an emergence of a supply pinch point, which could further impact price performance in the short term. 

An analysis of transaction activity reveals that the market remains largely dominated by owner occupiers; 61%. Furthermore, investors bought 25% of the properties transacted in the year-to-date. This represents a very significant uplift on previous years.

First-time buyers remain a relatively active cohort in the market, accounting for 11% of the properties traded in the eleven month period.

Cash is a driving force in the market with latest available figures revealing that approximately 54% of all residential transactions in the first nine months of the year were bought outright with cash alone.

For more, read this week’s Connacht Tribune