House price indices and property website market reports.
Contributor - Jamie Douglas, MSCSI, MRICS, RICS Registered Valuer, Hunters Associate Director.
We are asked questions every day by both buyers and vendors in relation to the almost constant flow of reports analysing the Irish property market. Our answer is that buyers and vendors need to educate themselves on what these reports are based on.
Regarding property website quarterly reports, from Daft.ie and MyHome.ie, the main point to note is that these are mainly based on asking prices and not prices achieved. This means that while they are indicative of how estate agents are pricing houses going to market, they do not reflect the actual prices being achieved. It is important to realise that when there is a softer period of interest, agents will often react by reducing asking prices. However, often this will result in bidding going well in excess of, either the original asking price, or the price that may originally have been envisaged when first valued, if the market has since improved again. A good example of this was the period September to December where due to a variety of factors including an earlier budget, interest rate rises and a forecast cost of living crisis, demand noticeably slowed. Many agents then self-corrected to take account of this but the subsequent first quarter of 2023 has been much busier and we have seen many examples of up to 10% over asking being achieved as a result.
In relation to the Central Statistic office figures, there is even more of a health warning. While they very accurately portray a monthly snapshot of the market, one must remember that their figures are based on the closing price of sales that were agreed. Our figures currently show an average of 10 weeks for a property to close, once sale agreed and that is not counting 2-4 weeks on the market. The national average stands at close to 7 months apparently, which is an outrageous amount of time. This means that most closed sale prices recorded on the property price register, which the CSO works off, were likely agreed at least three and a half to four months prior. So, the CSO figures for January 2023 will only reflect at best the market as it was, in September/October of 2022.
Therefore, as a buyer or a vendor we would advise you to take everything you read about the market with a grain of salt, good and bad if it’s based on these figures.
As an aside, I can tell you that in our experience the market went a bit soft from September to December but started to show signs of recovery in December, as soon as the relaxation of central bank lending rules for first time buyers were announced. The first quarter of 2023 has been very busy across all our offices with offers well over asking being a regular occurrence and we are confident this will continue in the short to medium term. Unfortunately, after that you would need a crystal ball to predict anything as there are so many micro and macro variables that could come into play.