The Brexit vote, and the subsequent fall in the value of sterling, caused a 32% drop in the amount of property enquiries from the UK over the past year, a national estate agents' survey has found.
Almost 20% of overseas enquiries about Irish property are now coming from the United States, from a negligible base two years ago, according to the Real Estate Alliance nationwide survey.
“Property buyers from the US are increasingly securing homes and investment properties in Ireland, buoyed by a strong dollar and the lure of a resurgent economy for emigrants,” said REA chairman Eamonn Spratt.
Real Estate Alliance are offering Irish property vendors the chance to take advantage of this mini-boom by registering for the Alliance’s upcoming Irish Property Exhibition in Boston.
“The average house price in the US in November 2016 was $365,200 (€341,739), compared to our Average House Price survey national value of $216,856 (€202,926), so there is obvious value for American buyers in Ireland,” said Mr Spratt.
“Our agents report that enquiries from the UK have dipped by a third since the Brexit vote, and the attendant fall in the value of sterling against the Euro.
“But while the UK still forms 37% of our overseas business, 19.6% is coming from the US, 18% from Australia, 15% from mainland Europe and 11% from other locations – especially Canada.
“78% of our members report an increase in enquiries from overseas in the last year, with the average agent seeing a 22% rise in calls from outside Ireland.
“The biggest rises were seen in calls from Irish emigrants planning to return from Australia, which increased from 11% in 2015 to 18% in 2016.
“The resurgent economy is having a positive effect on the market with the number of overseas buyers enquiring about moving to live and work in Ireland rising by 9% over the past year.”
Overseas calls now make up 18% of all enquiries across the REA group.
REA agents report a rise in sales instructions from Europe, consisting of a mix of Irish emigrants and holiday home owners who feel that they are now out of negative equity situations.
The survey showed that 29% of overseas buyers are purchasing a home for their retirement and 16% are purchasing as an investment, down from 20% in 2015.
40% of sales to overseas purchasers are now for properties valued above €200,000 – a rise of 9% on the 2015 figure.
“While the market between €150,000 to €200,000 is static at 16%, the biggest change in the market has been the drop of 25% in sales of properties below €100,000,” said Mr Spratt.
“This reflects the decline in stocks of excess housing for under six figures in rural counties, and was mirrored in our recent average house price survey which saw huge percentage rises in counties such as Longford and Roscommon off a very low base.”
The first group to pioneer Irish sales in the US, REA are bringing thousands of properties to Boston, giving a host of US buyers the chance to browse in comfort and talk to the experts on the ground.
The exhibition takes place in the Lenox Hotel, Boston from 5-8pm on March 23.
“Last year we brought the first Irish property exhibition to the US and met with 425 potential buyers in New York.
“32% of the attendees were Irish families looking to return home, 19% were retirees looking to downsize, and 17% were young Irish people returning to work.
“5% of attendees were searching for a holiday home and another 3% were keen to buy a second home with ties to family in Ireland.
“A survey of attendees also found that 16% were investors while 8% were US-based people who have homes in Ireland and were looking for them to be either sold or managed.”
Real Estate Alliance (REA) is Ireland’s leading property group of Chartered Surveyors with over 55 branches nationwide, comprising many of the country’s longest-established auctioneers and estate agents.
Further details on the REA Boston Property Exhibition, and a list of local agents, can be found on www.realestatealliance.ie/Boston or send an email to register for the event at info@rea.ie.
Available for interview:
Eamonn Spratt, REA Chairman 086 2531277 eamonn@reaspratt.ie or via Eimer O’Keefe 086 824 9040 eimer@rea.ie
Other media enquiries:
Darren Hughes, MediaConsult, darren@mediaconsult.ie, 086 293 7037
Monday, 30 January 2017
Monday, 23 January 2017
Ask the experts: How do you see the Irish residential market behaving in 2017?
Eamonn Spratt, Chairman, Real Estate Alliance
1. How do you see the Irish residential market behaving this year? (2017)
Our agents nationwide estimate 6% growth in 2017, off the back of an 8.4% increase last year – however, there is a lower level of expectation in the commuter counties at 3.8%.
We have already noticed a tailing off of receiver/bank/fund sales and a marked increase in first-time buyers at viewings in the latter weeks of Q4, setting the trend for 2017.
A lack of supply is continuing to push prices upwards, which is bringing builders back into the market.
2. In what locations do you expect to see most capital value growth?
Stronger price centres such as Dublin and Cork city will see most growth, due to the easing of the Central Bank mortgage lending restrictions.
Our agents in Dublin are predicting a 6.8% rise in 2017 and we are already seeing the positive effects of first-time buyers returning to viewings.
While expectations in the commuter areas are lower at 3.8%, a complete scarcity of suitable supply in the rest of the country is expected to fuel increases of 7.3 in our larger rural towns nationwide.
3. Are prices static or falling in any locations that you can think of?
Prices were static in commuter towns such as Ashbourne, Blessington, Naas, Maynooth and Celbridge in Q4, with low growth figures in 2016.
4. Where do you see rents going in 2017?
Rents will continue to rise until supply improves. Until building starts, this issue won’t be dealt with. In Dublin, new stock is under construction and now that first time buyers are re-entering the market, there may be a little easing.
However, the introduction of rent controls in the capital may see many landlords look at exiting the market, reducing the amount of available stock.
5. What impact (if any) do you think the combined effects of last Budget’s Help To Buy scheme combined with the Central Bank’s end of year tweaks to its lending regime will have on the market?
The combination of these measures has already given an injection in to the market with first-time buyers suddenly in evidence at viewings in the capital in November.
The moves have given the younger generation a foot on the ladder to buy a family home.
6. What are your views on Rebuilding Ireland, Minister Coveney’s plan to sort out the housing crisis?
The State needs to fast track the supply of affordable homes to address the void of local authority construction over the last decade.
The Minister seems to be passionate about the task in hand, but the proof will be in the building.
7. What steps would you urge the Government to take in 2017 to help solve the housing crisis?
Until the procurement process is speeded up and the provision of services to zoned lands are enhanced, this vehicle won’t get out of second gear.
We have zoned lands, developers are ready to build, but nationally they are finding that they can’t get the required services in due to a multiplicity of agencies such as Irish Water.
Local authorities also need to be realistic and introduce a phasing of upfront monies to include development fees and contributions.
Local authorities have also changed the format of the bond that they are now accepting, looking for payments upfront whereas previously an insurance bond would suffice.
8. How do you see the supply situation at the moment? Where do you think it will go in 2017?
Development financing is the key to solving the housing supply shortage as home building becomes potentially profitable again for builders.
The majority of new housing is set to be delivered outside the Greater Dublin and commuter area where the issue now is financing to fund construction – especially in areas where the house price is substantially under €200,000 but a need for housing exists.
The State can impact housing supply by introducing a phased payment structure for developers to including development fees and contributions.
9. In your experience, what percentage of buyers are paying cash? Do you think this will rise or fall this year?
Our REA Average House Price Survey for Q4 shows that 31% of purchasers are cash buyers, a drop of 16% on the December 2015 figure of 37%.
The highest percentage of cash buyers are in the rural towns outside the commuter areas, where the figure stands at 38%, down from 44% this time last year.
In Dublin city, we have seen a large increase in mortgage-funded purchases over the past year, with just 22% cash buyers in Q4.
10. What would you buy if you were an investor spending (a) €250,000, (b) €350,000 and (c) €600,000. (specificially to a property type and a specific area address egs: three bed semi in Chapelizod/ two bed apart in Portlaoise etc) and why?
(a) Spending €250,000 – Three bed semi in Tallaght area achieving €1,600pm
(b) Spending €350,000 – Three bed semi in Firhouse / Knocklyon area achieving €1,850 - €1,950pm
(c) Spending €600,000 – Four apartments in north Dublin that yield 10% per annum and will appreciate in value.
11. In your view how is the supply side of the residential property market sitting at the moment?
Supply is extremely low – as an example, there are only 62 properties for sale in the Tallaght area at the moment.
There is a big under supply of suitable properties for people to downsize to, such as bungalows in towns, and also very few 4 or 5 bed detached in the stronger rural towns for families.
12. If supply is at a record low right now why aren’t enough people selling?
The lack of suitable supply to trade up to is an issue throughout the market not just at the lower, new or first-time end.
While the Central Bank mortgage restrictions have been eased for first-time buyers, second time buyers still cannot afford to save the massive deposits needed to make the step-up from a 225,000 home to a 400,000 home – thus keeping supply low at the starter end.
13. Is it a good time to be a first-time buyer? State why?
Yes. We are seeing evidence of a sudden return of the first-time buyer to viewings, especially in the Dublin area, since the lifting of the Central Bank restrictions.
The 16% annual fall in cash buyers points to a willingness of banks to lend again and compete for business.
However, the choice is limited and there are little to no new schemes available, especially outside Dublin.
14. Is it a good time to trade down? State why?
If the rate of growth is consistent across the market, you have more to gain on the larger asset, and they may inform your decision.
If I own a house worth €1m, and growth is forecast at 5%, then I stand to gain €50,000 in value over the year. If I am moving down to a €300,000 house it will appreciate by €15,000 – the difference is €35,000.
For older couples downsizing, there is a lack of suitable smaller accommodation nationwide.
15. Is it a good time to trade up? State why?
Yes. There should be strong interest in what you have to sell. The average house price rose by 8.4% last year and recent announcements have been positive for the market.
Also, the value differential between a three-bed semi or similar and four-bed detached either in an estate or the country is now much less than any time since the 90s.
Assuming that you can get the finance, it is a good time to sell.
16. In your view, will there be enough new homes to meet demand in 2017?
It is difficult to see the construction sector meeting the significant demand in the stronger centres in 2017.
17. Is there a danger of another property bubble forming as some are claiming? Explain
That fear always exists in a cyclical property market. At the moment, the restrictive nature of deposit limits for second-time buyers and very short mortgage approval time limits are serving to keep a rein on the market.
For a market to overheat you would need much more freely-available credit. This is not the case at the moment.
Not many people are purchasing for a quick return – they are either owner occupier-led or investors looking at yields over a five to ten-year play.
18. In your view, how can we best facilitate the roll out of new homes required to solve the crisis?
We need available and affordable development finance, the provision of serviced zoned land and a realistic expectation from local authorities around associated development costs such as phased payments for development fees and contributions.
19. In your view, what particular challenges are buyers facing in regional towns?
The main issue is a limited supply of suitable four bed homes which provide an opportunity for the starter home family to trade up.
A higher percentage of cash buyers, who are outbidding young mortgage buyers, are able to purchase and complete as they can bypass many of the time factors associated with the modern mortgage process.
20. Do you believe developers when they say building is not taking place because the cost of building is still too high relative to what people will pay? What is your view here
The cost to build to date versus the selling price of the new home has been a genuine prohibitive factor for developers, especially in areas where the average house price is less than €200,000.
Thursday, 12 January 2017
House prices in Tipperary are expected to rise by 6.8% in 2017
House prices in Tipperary are expected to rise by 6.8% in 2017, a survey by the Real Estate Alliance Group has found.
Limited supply and the easing of first-time buyers restrictions are expected to continue the 9.8% growth that the county experienced in 2016, according to REA.
This comes as the Q4 REA Average House Price Survey revealed that prices in Tipperary had increased by €12,625,000 over the past year – with the average three-bed semi now costing €141,250.
Lack of suitable supply has driven average house price rises throughout the county in 2016.
Nenagh showed the biggest increase at 19.7% – with prices moving from €117,000 to €140,000 in the 12-month period.
Prices in Roscrea increased by 2.1%, and stand at €120,000, while those in Clonmel rose 3.2% to €160,000.
Prices in Newport rose by €20,000 to €145,000 over the year – an annual increase of 16%.
The price prediction survey found that agents expect prices nationally to rise by 6.1% over the next year – with Dublin predicted to grow by 6.8% over the next 12 months.
Agents in the three main cities outside Dublin are optimistic about 2017, with rises of 10% predicted in Limerick and Galway, with Cork looking at a more modest 5% increase with agents in the latter two areas highlighting a lack of new developments planned for the cities.
The outlook for the commuter areas surrounding the capital is quite cautious, with counties around Dublin predicting a rise of 3.8% on average and many agents fearing that the market has hit its height under the current financial regime.
The average semi-detached house nationally now costs €202,926, the Q4 REA Average House Price Survey has found – a rise of 1.4% on the Q3 figure of €200,148.
The biggest percentage increases over the past year came in the country’s smaller rural towns situated outside of Dublin, the commuter belt and the major cities.
Prices here rose by an average of 12.3% over the year, with a three-bed semi now costing €134,290 – an increase of 2.4% in the past three months.
“The announcement of the easing of the Central Bank restrictions has given the market great short-term hope, but the real problem in the property lies in supply,” said REA chairman Eamonn Spratt.
“We are bringing people into the market, but we have no long-term plan to provide the suitable housing that they need around the country.
“The fact remains that builders will not create developments unless those properties can be sold for more than €200,000.
“Until that point, unless there is state intervention on supply financing, we will not see sustainable building in areas where the average is below that point.
“It is this realisation that is causing price inflation in towns around the country, with the highest rises of all – an average of 7.4% – being predicted for the sector outside of Dublin, the commuter areas and the major cities.
Ends
Available for interview:
Eoin Dillon, Nenagh, 087 2052 716
Seamus Browne, Roscrea, 0872499570
James Lee, Newport, 086 2351221
John Stokes, Clonmel, 086 8213777
Limited supply and the easing of first-time buyers restrictions are expected to continue the 9.8% growth that the county experienced in 2016, according to REA.
This comes as the Q4 REA Average House Price Survey revealed that prices in Tipperary had increased by €12,625,000 over the past year – with the average three-bed semi now costing €141,250.
Lack of suitable supply has driven average house price rises throughout the county in 2016.
Nenagh showed the biggest increase at 19.7% – with prices moving from €117,000 to €140,000 in the 12-month period.
Prices in Roscrea increased by 2.1%, and stand at €120,000, while those in Clonmel rose 3.2% to €160,000.
Prices in Newport rose by €20,000 to €145,000 over the year – an annual increase of 16%.
The price prediction survey found that agents expect prices nationally to rise by 6.1% over the next year – with Dublin predicted to grow by 6.8% over the next 12 months.
Agents in the three main cities outside Dublin are optimistic about 2017, with rises of 10% predicted in Limerick and Galway, with Cork looking at a more modest 5% increase with agents in the latter two areas highlighting a lack of new developments planned for the cities.
The outlook for the commuter areas surrounding the capital is quite cautious, with counties around Dublin predicting a rise of 3.8% on average and many agents fearing that the market has hit its height under the current financial regime.
The average semi-detached house nationally now costs €202,926, the Q4 REA Average House Price Survey has found – a rise of 1.4% on the Q3 figure of €200,148.
The biggest percentage increases over the past year came in the country’s smaller rural towns situated outside of Dublin, the commuter belt and the major cities.
Prices here rose by an average of 12.3% over the year, with a three-bed semi now costing €134,290 – an increase of 2.4% in the past three months.
“The announcement of the easing of the Central Bank restrictions has given the market great short-term hope, but the real problem in the property lies in supply,” said REA chairman Eamonn Spratt.
“We are bringing people into the market, but we have no long-term plan to provide the suitable housing that they need around the country.
“The fact remains that builders will not create developments unless those properties can be sold for more than €200,000.
“Until that point, unless there is state intervention on supply financing, we will not see sustainable building in areas where the average is below that point.
“It is this realisation that is causing price inflation in towns around the country, with the highest rises of all – an average of 7.4% – being predicted for the sector outside of Dublin, the commuter areas and the major cities.
Ends
Available for interview:
Eoin Dillon, Nenagh, 087 2052 716
Seamus Browne, Roscrea, 0872499570
James Lee, Newport, 086 2351221
John Stokes, Clonmel, 086 8213777
Monday, 9 January 2017
Opinion Piece: Eamonn Spratt - Chairman of REA
What a difference a year makes, with property agents around the country all predicting rises for 2017 that would indicate a return to a functioning market.
But while a national average increase of 6.1pc seems healthy and consistent, and in no way indicating a bubble, we could be facing a vastly different situation in 12 months' time if the current supply does not change.
The Irish Independent Real Estate Alliance survey shows optimism in the market, with the return of first-time buyers to viewings, thanks to the easing of the Central Bank deposit restriction and the Government's Help to Buy scheme. However, they will compete with people trading down for a limited supply of mostly second-hand stock, unless the Government instigates Help to Build measures for developers.
New home building will not take place unless the barriers are lifted, which at the moment are preventing developers from entering the market. Developers will have to be encouraged to build in areas where it is not yet viable, but demand exists - and the State has to intervene to allow that to happen.
For the first time in eight years, our members are seeing builders looking for suitable development land. Our members have received feedback that developers are finding construction finance difficult to procure.
Nama chairman Frank Daly recently confirmed it may fund 20,000 residential units by the end of 2020, subject to commercial viability. About 78pc will be delivered in Dublin, and 15pc in commuter counties such as Kildare, Wicklow and Meath - and it will be profitable for builders to construct in these areas, with selling prices in excess of the building cost of €200,000. However, just 7pc of housing will be delivered outside the Greater Dublin area, where the issue now is financing to fund construction - especially in areas where the house price is substantially under that break-even level.
Our agents in Cork and Galway cities have noted a lack of new developments coming on-stream, which should be a warning for the rest of the country. House building in 2017 will not just be about the price that can be obtained - the path to breaking ground must be cleared for development to take place. Until the procurement process is speeded up and the provision of services to zoned lands enhanced, this vehicle won't get out of second gear. There are several factors at play.
In areas where it is profitable to build, we have zoned lands, and developers can't get the required services due to having to deal with multiple agencies.
Some local authorities are looking for payments upfront whereas previously, an insurance bond would suffice. Councils also need to introduce a phasing of upfront monies to include development fees and contributions. Concerted action can be taken in these areas to address a supply issue which is approaching critical in some places - for example, there are only 62 properties for sale in the Tallaght area at the moment.
The market has also seen an increase in people downsizing. However, we need a supply of people trading upwards, which is where the Central Bank's deposit restrictions and multiplier limits have hit the second-time buyer. The person who wishes to trade up and leave the smaller home which the downsizer now wants, is finding it difficult to secure the finance to do so.
Eamonn Spratt is chairman of the Real Estate Alliance
But while a national average increase of 6.1pc seems healthy and consistent, and in no way indicating a bubble, we could be facing a vastly different situation in 12 months' time if the current supply does not change.
The Irish Independent Real Estate Alliance survey shows optimism in the market, with the return of first-time buyers to viewings, thanks to the easing of the Central Bank deposit restriction and the Government's Help to Buy scheme. However, they will compete with people trading down for a limited supply of mostly second-hand stock, unless the Government instigates Help to Build measures for developers.
New home building will not take place unless the barriers are lifted, which at the moment are preventing developers from entering the market. Developers will have to be encouraged to build in areas where it is not yet viable, but demand exists - and the State has to intervene to allow that to happen.
For the first time in eight years, our members are seeing builders looking for suitable development land. Our members have received feedback that developers are finding construction finance difficult to procure.
Nama chairman Frank Daly recently confirmed it may fund 20,000 residential units by the end of 2020, subject to commercial viability. About 78pc will be delivered in Dublin, and 15pc in commuter counties such as Kildare, Wicklow and Meath - and it will be profitable for builders to construct in these areas, with selling prices in excess of the building cost of €200,000. However, just 7pc of housing will be delivered outside the Greater Dublin area, where the issue now is financing to fund construction - especially in areas where the house price is substantially under that break-even level.
Our agents in Cork and Galway cities have noted a lack of new developments coming on-stream, which should be a warning for the rest of the country. House building in 2017 will not just be about the price that can be obtained - the path to breaking ground must be cleared for development to take place. Until the procurement process is speeded up and the provision of services to zoned lands enhanced, this vehicle won't get out of second gear. There are several factors at play.
In areas where it is profitable to build, we have zoned lands, and developers can't get the required services due to having to deal with multiple agencies.
Some local authorities are looking for payments upfront whereas previously, an insurance bond would suffice. Councils also need to introduce a phasing of upfront monies to include development fees and contributions. Concerted action can be taken in these areas to address a supply issue which is approaching critical in some places - for example, there are only 62 properties for sale in the Tallaght area at the moment.
The market has also seen an increase in people downsizing. However, we need a supply of people trading upwards, which is where the Central Bank's deposit restrictions and multiplier limits have hit the second-time buyer. The person who wishes to trade up and leave the smaller home which the downsizer now wants, is finding it difficult to secure the finance to do so.
Eamonn Spratt is chairman of the Real Estate Alliance
REA House Price Predictions 2017
First-time buyers, encouraged by the easing of the Central Bank’s restrictions on mortgage deposit lending, will drive a continued rise in house prices throughout 2017, estate agents have predicted.
A survey carried out for the Irish Independent by the Real Estate Alliance Group has found that agents throughout the country expect prices to rise by 6.1% on average in 2017.
And after a bumpy year for the Dublin market, agents in the capital are predicting that house price rises will outstrip the national average and grow by 6.8% over the next 12 months.
Rising rents, a lack of suitable supply and the punitive mortgage deposit rules for first and second time buyers had combined to put the Dublin property market into reverse throughout the opening months of 2016.
However, an increase in mortgage-approved buyers and the recent easing of the Central Bank’s deposit restrictions has seen first-time buyers return to viewings.
This, combined with a shortage of suitable supply, has caused prices to appreciate, and REA agents in the capital are predicting that the outlook is bright for the new year, at least in the lower end of the market.
However, there is less appreciation anticipated in the upper ends of the family home scale as serious issues around the income multiplier and the deposit rates put the brakes on many second-time buyers trading up.
Agents in the three main cities outside Dublin are optimistic about 2017, with rises of 10% predicted in Limerick and Galway, with Cork looking at a more modest 5% increase with agents in the latter two areas highlighting a lack of new developments planned for the cities.
The outlook for the commuter areas surrounding the capital is quite cautious, with counties around Dublin predicting a rise of 3.8% on average and many agents fearing that the market has hit its height under the current financial regime.
Agents in Meath are predicting just a 1.8% change next year, with some areas such as Navan and Kells forecasting that there will be no movement in the coming 12 months, thanks to a lack of new development and a shortage of suitable supply.
There was minimal growth in the final quarter of 2016 in Wicklow, however, agents are confident that the market will react positively to a series of significant upcoming new developments adjacent to the N11 including Kilcoole, Rathnew, Arklow and Wicklow Town.
Prices in Kildare were stagnant in the REA’s Q4 Average House Price Survey, and REA are predicting that the Government’s Help To Buy Scheme and the easing of the Central Bank restrictions will combine to produce a 3.5% increase in the coming year.
“The easing of the Central Bank restrictions has given the market great short-term hope, but the real problem in the property lies in supply,” said REA chairman Eamonn Spratt.
“We are bringing people into the market, but we have no long-term plan to provide the suitable housing that they need around the country.
“The fact remains that builders will not create developments unless those properties can be sold for more than €200,000.
“Until that point, unless there is state intervention on supply financing, we will not see sustainable building in areas where the average is below that point.
“It is this realisation that is causing price inflation in towns around the country, with the highest rises of all – an average of 7.4% – being predicted for the sector outside of Dublin, the commuter areas and the major cities.
“Longford, for example, grew by 41% in 2016 and prices are predicted to rise by a further 15% this year.
“However, the price of the average house in Longford town is just €78,000 and will reach €90,000 by the end of 2017 simply because the oversupply on the market has now sold and there are no new developments on the horizon.
“Double digit rises of 10% are also being predicted for the same reason in Roscommon, Monaghan, Cavan, Galway County and Kilkenny.”
The lack of building opportunity could hurt future economic development in lower-priced counties, as the example of Carrick-Shannon in Leitrim shows.
Local agents report that employment is growing in the town and that there will be a shortage of suitable properties through till 2018 at the earliest, with lack of supply predicted to drive a 10% rise in the coming year.
“The average house price is €122,000 and unless houses can sell for €180,000, builders will not make money and start building,” said Joe Brady of REA Brady.
In some areas of the commuter belt, those trading down are now in competition with first-time buyers such as In Ashbourne (+2%) and Drogheda, which is predicting a 7% rise.
Ends
A survey carried out for the Irish Independent by the Real Estate Alliance Group has found that agents throughout the country expect prices to rise by 6.1% on average in 2017.
And after a bumpy year for the Dublin market, agents in the capital are predicting that house price rises will outstrip the national average and grow by 6.8% over the next 12 months.
Rising rents, a lack of suitable supply and the punitive mortgage deposit rules for first and second time buyers had combined to put the Dublin property market into reverse throughout the opening months of 2016.
However, an increase in mortgage-approved buyers and the recent easing of the Central Bank’s deposit restrictions has seen first-time buyers return to viewings.
This, combined with a shortage of suitable supply, has caused prices to appreciate, and REA agents in the capital are predicting that the outlook is bright for the new year, at least in the lower end of the market.
However, there is less appreciation anticipated in the upper ends of the family home scale as serious issues around the income multiplier and the deposit rates put the brakes on many second-time buyers trading up.
Agents in the three main cities outside Dublin are optimistic about 2017, with rises of 10% predicted in Limerick and Galway, with Cork looking at a more modest 5% increase with agents in the latter two areas highlighting a lack of new developments planned for the cities.
The outlook for the commuter areas surrounding the capital is quite cautious, with counties around Dublin predicting a rise of 3.8% on average and many agents fearing that the market has hit its height under the current financial regime.
Agents in Meath are predicting just a 1.8% change next year, with some areas such as Navan and Kells forecasting that there will be no movement in the coming 12 months, thanks to a lack of new development and a shortage of suitable supply.
There was minimal growth in the final quarter of 2016 in Wicklow, however, agents are confident that the market will react positively to a series of significant upcoming new developments adjacent to the N11 including Kilcoole, Rathnew, Arklow and Wicklow Town.
Prices in Kildare were stagnant in the REA’s Q4 Average House Price Survey, and REA are predicting that the Government’s Help To Buy Scheme and the easing of the Central Bank restrictions will combine to produce a 3.5% increase in the coming year.
“The easing of the Central Bank restrictions has given the market great short-term hope, but the real problem in the property lies in supply,” said REA chairman Eamonn Spratt.
“We are bringing people into the market, but we have no long-term plan to provide the suitable housing that they need around the country.
“The fact remains that builders will not create developments unless those properties can be sold for more than €200,000.
“Until that point, unless there is state intervention on supply financing, we will not see sustainable building in areas where the average is below that point.
“It is this realisation that is causing price inflation in towns around the country, with the highest rises of all – an average of 7.4% – being predicted for the sector outside of Dublin, the commuter areas and the major cities.
“Longford, for example, grew by 41% in 2016 and prices are predicted to rise by a further 15% this year.
“However, the price of the average house in Longford town is just €78,000 and will reach €90,000 by the end of 2017 simply because the oversupply on the market has now sold and there are no new developments on the horizon.
“Double digit rises of 10% are also being predicted for the same reason in Roscommon, Monaghan, Cavan, Galway County and Kilkenny.”
The lack of building opportunity could hurt future economic development in lower-priced counties, as the example of Carrick-Shannon in Leitrim shows.
Local agents report that employment is growing in the town and that there will be a shortage of suitable properties through till 2018 at the earliest, with lack of supply predicted to drive a 10% rise in the coming year.
“The average house price is €122,000 and unless houses can sell for €180,000, builders will not make money and start building,” said Joe Brady of REA Brady.
In some areas of the commuter belt, those trading down are now in competition with first-time buyers such as In Ashbourne (+2%) and Drogheda, which is predicting a 7% rise.
Ends
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