Lack of supply ups property prices

There has been an increase of more than 40% in the value of mortgages granted in the third quarter of the year, while the number and value of property transactions in Dublin have soared.

Both the Irish Banking Federation and PricewaterhouseCoopers and Myhome.ie surveys highlight a shortage of supply as the factor pushing up prices.

The Irish Banking Federation and PwC’s quarterly report into new mortgage lending found that there was a 38.8% increase in the value of mortgages drawn down in the third quarter of this year compared to the second.

IBF chief executive Noel Brett said that the rise in property transactions was a welcome development but he added that they may be driven by a shortage in supply.

“IBF welcomes the increase in the number of new mortgages drawn down by borrowers as seen in the Q3 figures. Banks are well positioned to lend to customers who meet the criteria for a mortgage. The figures are a positive indicator of renewed borrower confidence and activity in the mortgage market. We will be looking closely at both mortgage approvals and drawdown activity over the final quarter of the year for ongoing signs of market strengthening; and it remains to be seen how such factors as supply shortage and rising prices in certain locations will impact on the trend,” he said.

In total there were 4,482 new mortgages to the value of €750m drawn down by borrowers during the third quarter of 2013.

Taking a closer look at the Dublin property market. a study by property website MyHome.ie found the value of transactions in the capital is at a three-year high, with €2.1bn spent on property between Jan 1 and Sept 30 this year.

Managing director of MyHome.ie, Angela Keegan, said its analysis of the Dublin property market suggested it was being driven by a lack of supply.

“The number of transactions in the capital is up 13% for the first three quarters, with all but two areas seeing a rise. Those were Dublin 15 and Dublin 18 but the value of transactions actually rose in Dublin 18, which suggests that shortage of stock is the issue there. That is an issue we are seeing in many parts of the capital and with just 3,400 homes available for sale in Dublin, the lack of supply is driving prices higher,” she said.