Property price growth has been weak so far in 2016 but on Wednesday, Ireland’s official statistics provider could reveal that Irish house prices have been rising at a faster pace than previously thought.
On Wednesday the Central Statistics Office (CSO) will publish its residential property price index (RPPI), which tracks house prices across the country. Its index for July, however, will include transactions financed by both mortgage debt and cash purchases, marking the first time that cash purchases will have been included in the metric.
E-stamping
The new index will be based on stamp duty returns made to the Revenue Commissioners, and is in response to criticisms that the index tracked only a portion of the market.When the index was launched in 2011, e-stamping had only been introduced, and the CSO was unable to access Revenue data, hence the reliance on mortgage statistics.
Given that cash purchases currently account for about 50 per cent of transactions, Davy Stockbrokers economist Conall MacCoille expects that the index will reveal “ significant revisions” to the pace of house price inflation reported since 2011.
“The new RPPI measure could lead to substantial revisions. We do not expect material changes in the timing of the recovery, but the magnitude could alter,” he said.
The current index, for example, shows house prices began to recover in 2013, up 6.4 per cent, and rose by 16.3 per cent in 2014 and 6.6 per cent in 2015. So far in 2016, price growth has been weak, up just 0.3 per cent between December and June. However, Mr MacCoille said “the new index could reveal that Irish house prices have already been rising at a faster pace in 2016”.
Price trough
The new data could also recalibrate the trough in property prices. The index at present shows that the boom in house prices continued up until the third quarter of 2007, but then fell back by 51 per cent and prices are now 33 per cent off peak, while the now defunct ESRI index suggested the peak occurred earlier, in the fourth quarter of 2006.
“So Wednesday’s new RPPI index could revise the overall size of Ireland’s house price boom and bust,” Mr MacCoille said.
The new index will also include regional indices, giving a breakdown of price and transactions trends in specific areas, such as Dublin city and Dún Laoghaire–Rathdown, as well as statistics drawn from eircodes.
It will also include details on the characteristics of sellers and buyers.
One omission in the new index is data on institutional buyers, such as the likes of real-estate investment trusts, and it will also exclude non-market transactions.
