The rebound in Irish property will weaken next year as tight credit conditions and mortgage arrears exert a downward pressure on prices, according to rating agency Standard and Poor’s (S&P).
The rating agency’s somewhat sober assessment of the market comes amid a raft of positive data relating to the sector.
S&P predicts house prices will rise nationally by 3.5 per cent this year which is in line with several recent industry predictions.
Improvement in the economy and employment, in tandem with a supply constraint in Dublin, will help drive recovery in the housing market in 2014, it said.
However, it predicted the acceleration in prices will slip back to 2 per cent in 2015 because of the prevailing credit climate and the ongoing problem of mortgage arrears.
“Bank lending conditions remain tight and high mortgage arrears will maintain downward pressure on house prices.”
While prices rose nationally for the first time in six years in 2013, S&P said prices were still about 47 per cent below the peak in 2007.
It said Dublin house prices were now 19. 2 per cent higher than their low point, while prices elsewhere in the country were still experiencing declines as recently as November last year.
Separately, a report by the Society of Chartered Surveyors Ireland (SCSI), released today, said negative equity and a lack of mortgage finance were continuing to “hamper the release” of existing housing stock.
The SCSI’s latest Residential Property Review and Outlook said the Republic’s property market had “turned a corner” last year, with averages prices in Dublin rising 15. 7 per cent, and those outside Dublin rising by 5.7 per cent.
The report, which is based on a nationwide survey of its members, said more than 80 per cent of property professionals reported an increase in the volume of sales in 2013.
It also highlighted 55 per cent of those surveyed in Dublin claimed “a lack of supply and increased demand” were the most significant issues affecting the market
The report also noted that about 50 per cent of transactions were now being made in cash.
Those surveyed also reported an “increased interest” in Dublin’s residential market from investors, both domestic and foreign.
On the rental side of the market, the report said most agents expected average rents to rise in 2014.
It found rents in Dublin varied from €878 per month for a one bed apartment to over €1,700 for a four-bed semi-detached house. Outside Dublin the rents varied from €450 to around €800, approximately half the prices charged in the capital.
"The property picture was very much a case of an urban led stabalisation and recovery with the regions languishing behind," Simon Stokes, chair of the residential group of the SCSI said.
“More people are looking at long term renting as a life choice while increased housing standards means that pre 1963 stock has generally been taken out of the system and not been replaced. These factors are putting further pressure on supply,” he added.
