Irish Mortgage Lending Posts First Year-on-Year Rise Since 2006
Since the bursting of the significant property bubble in 2008, Irish house prices have fallen by up to half. Earlier this year, fears of further price declines and tight lending conditions saw mortgage lending figures reach their lowest level. Now, however, a turn may be in sight. The Irish Banking Federation/PwC quarterly mortgage survey showed that almost 4,000 new home loans were granted by banks in the July-September period. This shows a nearly 25 per cent gain on the previous quarter and a 10 per cent year-on-year increase – the first such rise in six years -- Reuters reported on 8 November 2012.
The overall value of the mortgages issued by Irish banks in the third quarter of the year was €663 million (£529 million), which was also the largest volume since the end of 2010. Yet when added together, the €2 billion (£1.6 billion) lent over the past four quarters is still dwarfed by the €40 billion (£32 billion) peak lent in 2006.
First-Time Home Buyers Boost Mortgage Market
The third-quarter lending boom in Ireland was partly contributed to by the government’s provision of interest relief to those buying their first home before the end of the year. In fact, first-time buyers drew down half the number of new mortgages.
In regards to the posted increase in home loans issued to first-time buyers, Goodbody Stockbrokers economist Juliet Tennent wrote in a note: "This improvement in activity echoes the increase in the number of property transactions reported by the new property register and supports the stabilisation in house prices seen recently. However, mortgage relief for first time buyers is likely to be encouraging this segment of the market and it remains to be seen if these positive trends continue after the end of 2012 when the relief is due to expire."
House Prices Edge Up
The Irish property market is also showing further signs of stabilising. According to Ireland’s Central Statistics office, last month, house prices across the country climbed 0.9 per cent, accelerating from 0.5 per cent in August and 0.2 per cent in July. This is the fastest monthly growth recorded in five years and a cause for increased optimism amongst analysts.
“We genuinely believe the housing market may have turned around after bottoming in June,” Owen Callan and Frank Oeland Hansen, analysts at Danske Bank A/S, a primary dealer in Irish government debt, said in a note. “Potential home buyers might begin to view this as a golden opportunity.”
Commercial Property Also Gains Ground
While mortgage market activity is getting back into positive growth territory, Ireland’s commercial property sector is also reviving, as is evident from the increased investor interest in commercial real estate assets across the country. According to Bloomberg, citing data from commercial real estate company CBRE Group Inc, in the first nine months of this year, commercial property investment was about €230 million (£183.5 million) compared to €192.2 million (£153.2 million) over the entirety of 2011. Yet, this amount also pales in comparison to the total of €3.04 billion (£2.42 billion) outlayed in the property peak of 2006, said Marie Hunt, the broker’s research head in Dublin.
Ireland’s Largest One-Day Commercial Property Auction to be Held
Along with the news of stabilising Irish real estate, the country’s largest one-day commercial property auction was announced to be held next month by auction giant Allsop Space, Bloomberg reported on 8 November 2012. A street lined with shops in the town of Clonmel, a Dublin park and three pubs will be amongst the assets offered for sale in what will be the firm’s first Dublin real estate auction in which commercial lots exceed residential.
Allsop Space’s director Robert Hoban, said: “We are getting contacted by more and more clients with commercial property that they want to sell. It is reflective of the supply of commercial property that is there to be sold. There is no shortage.”