Seasonal break brings chilling autumn to close
ON THE MOVE:The property market has started pulling down the shutters until the new year. Househunters have become distracted by Christmas and the scramble for presents, while vendors are postponing any decisions about putting their house on the market until the first signs of spring.
In north Dublin, for example, just 39 properties came on the market in the week starting November 26th, with the south city reporting a slightly more buoyant 57 properties, according to myhome.ie. Elsewhere, the slowdown is more marked – in Limerick city just seven vendors listed their home during that week, while in Cork city 14 properties were put on the market.
Nothing unusual about that, you say, it’s December after all. But this December is unlike any other, and such a lack of supply compounds the inherent problems in the market.
When we seriously started looking to buy in September, there was a sense the market was starting to rebound. Houses were selling, with some even surpassing their asking prices. This gave others the confidence to put their homes on the market.
But then the Property Price Register came along and some people got scared. If the boom was characterised by people buying property in the expectation that it would be an earner in terms of capital appreciation, it seems the opposite is true now. People are terrified of paying too much and succumbing (further?) to negative equity.
Indeed in our target area we have come across at least three houses which were sale-agreed in September, but by November were back on the market. One, in Blackrock, Dublin, was about €380,000 but bidding took it to €420,000.
Then the sale fell through and it was back on the market at the higher price. It still hasn’t sold.
It’s enough to give any vendor the jitters, particularly when they might struggle to find – and complete a sale on – another property. One solicitor told me of deals that had gone sale-agreed but were stalling.
It’s something we’ve experienced. As we edged our bids up towards the asking price, we were met with abrupt refusals each time – with no mention of negotiation. From the vendor’s perspective, it possibly makes sense to wait until they have sale-agreed on another house before committing to an offer (especially if the market starts to rise) but it is frustrating for buyers.
Another sign that the market is still abnormal is the number of receivership sales. While you might think such sales are restricted to large auctions in The Shelbourne Hotel, they also happen in private treaty sales.
Another solicitor told me, receivership sales are the “market makers” at the moment. And they are likely to get busier. Until now, foreign-owned banks have pushed such sales, but Bank of Ireland recently made its move on a high-profile investor in what some see as a test case.
We recently came across a house that had no signs of being sold as a result of receivership, but after a few direct questions to the agent it appeared that it was. So it pays to ask whether the property is the subject of a receivership sale, otherwise, you could find you go sale-agreed on a house for a “bargain” price, get your mortgage approved, and wait to close only to find there is an issue with the title documents and you belatedly find out it’s a receivership sale.
Issues over title can frequently slow down such sales, and you may be warned by your solicitor not to expect any documentation to be perfect in such cases.
As a result, additional searches are usually warranted, which could up your legal fees by about 50 per cent.
It’s also still a choppy market that doesn’t always make sense. We were out-bid on that receivership property, as offers soared past the asking price (which wasn’t low to begin with).
And now, thanks to yesterday’s Budget, we have the property tax. While this is a burden most of us could do without, it might just help increase supply.
Elderly couples sitting in five-bed houses, for example, may find the prospect of a €1,000 annual tax an incentive to downsize. Or landlords might look to sell up, rather than stomach an additional charge.
This could give the market a lift. And sales are what’s needed to give the market any sense of normality.