The new homes market experienced a bumper year in 2004, surpassing the previous two buoyant years in the number of units built and purchased. Looking back, all the portents were there to ensure a record season.
"Last year was good, this year was even better," says Ken MacDonald of Hooke & MacDonald, echoing the contentment of most agencies as they come to the end of a successful year's trading.
Supply was strong, with an estimated 16,000 new homes built in the Dublin area compared with 14,394 in the previous year. Figures compiled by economist Geoff Tucker of the Hooke & MacDonald agency show that 77,000 new homes were built across the country in 2004, a jump of over 8,000 nationally on 2003.
Interest rates remained low, competition among lenders was keen and buyers shopped around. The Irish Mortgage Corporation arranged a typical variable tracker rate of 3.1 per cent for borrowers.
Those looking for security could get a one-year fixed rate of 2.74 per cent and a three-year fixed at 3.70 with Permanent TSB. EBS offered a three-year fixed mortgage for 3.95 percent, while a three-year fixed rate of 4.25 was on offer with AIB.
A jump in employment favoured the market, with unemployment below 4.5 per cent and the effect of partnership agreements filtering through. New homes prices grew at a moderate rate, estimated at 5 to 7 per cent.
"Ireland's strong economic performance has been fundamental to the strong performance of the property market. Without this, young people would not have been able to afford to buy and many would have left the country," says Ross McParland of Sherry FitzGerald New Homes.
High volumes and modest price increases brought a degree of certainty to the market, says Ronan O'Driscoll of Hamilton Osborne King, who launched Charlesland Wood in Greystones on January 1st, selling almost 300 houses while the rest of the country was recuperating after New Year's Eve celebrations.
The excitement over the Greystones development, initiated by builders Mountbrook and Ballymore, was because of a dire scarcity of new homes in this area for some time. Durkan New Homes is continuing to build at Charlesland, which is within walking distance of the DART and beach.
It was a buyers' market and developers upped the ante, enticing buyers with appliances and features like chrome light switches and downlighting as standard. Some schemes pushed the boat out with wiring for surround-sound and smart technology, adding value to encourage sales.
As in previous years, first-time buyers and investors made most of the running. Two out of three purchasers were buying for the first time, attracted by the absence of stamp duty and the prospect of a brand new property.
Townhouses were snapped up wherever the location, as buyers exercised their preference for houses over apartments. The Belfry, a mixed scheme of houses, duplexes and apartments by Durkan in Citywest, sold well to people working in west Dublin and investors appreciated the letting potential of the nearby business parks.
Latchford, another mixed townhouse and apartment scheme in Clonsilla, was a success for La Vista (part of the Lynam group) and for selling agent Douglas Newman Good. "It was a record year for new homes," says DNG's managing director Keith Lowe.
A gap in the market for family semis was filled by Ballintyre, a Glenkerrin scheme in Dundrum where 108 houses were sold for prices starting at around €500,000 through HOK. The Luas also fuelled interest.
Newcastle Manor, a Co Dublin development aimed at the family market, continued to do well for Douglas Newman Good. This development takes its design cue from the UK garden village concept, with hedgerows, varied roof lines and a village atmosphere.
Queues formed for Castlethorn's Belarmine development in Stepaside and Menolly's Beaupark scheme in Dublin 15, where Sherry FitzGerald New Homes sold phenomenally well. Stepaside village in the Dublin mountains was a draw with viewers at Belarmine. Dublin's largest new homes builder, Menolly, specialises in ready-to-go houses with practical layouts, so Beaupark was an instant hit with buyers.
This agency also sold well in Ratoath and Lusk: a McGarrell O'Reilly scheme where proper houses with gardens and driveways were a big draw. Hunterswood, an Ellier development off Ballycullen Road in Dublin 24 with a choice of styles, continued to attract first and second-time buyers.
There was little easing up in demand and sales trickled through the summer months. Apartments account for almost one in four new homes units under construction, according to the Bank of Ireland's Quarterly Analysis in August 2004. Oversupply has put pressure on private sector rents, partly alleviated by pre-'63 period houses in fashionable areas being re-converted to family homes.
Older rental stock found it difficult to compete with the surge in supply in city centre areas.
"There was a definite softening of the rental market at the beginning of 2004 and profits were eaten into, but rents have stabilised over the past nine months. The average rent for two-bedroom apartments in the city centre has crept up to the €1,225 mark," says Geoff Tucker of Hooke & MacDonald.
Agents had a successful year and expect the strong sales to continue into 2005. Developments in the city centre and along the Luas and DART lines fared best - a few which combined location with Section 23 tax breaks experienced very strong sales. Quartiere Bloom, a stylish project overlooking the Liffey on Ormond Quay "flew out the door" when launched in the autumn by Hooke & MacDonald.
Investors favoured city centre schemes, although strong rental areas such as Dundrum and around the M50 interchanges did well. Presentation was crucial and developers lifted their game in the race for sales.
Hollybrook, a luxurious scheme by Mountbrook off Brighton Road in Foxrock, was a huge success for Gunne New Homes. Penthouses here were going for up to €3 million. AWG's Oldtown Demesne in Naas and Ashford off Griffith Avenue, a Phillip Byrne project, were other examples of good finish influencing sales. "Location and quality of product were key issues," says Shane Daly of Gunne. "There was a huge investment by developers in presenting their properties for sale, supplemented by good marketing campaigns. Owner-occupiers came to the fore in the second half of the year," he adds.
Apartment blocks along the south quays with a sought-after Dublin 4 address also fared well. Most sold from plans, with imaginative marketing campaigns to inspire buyers.
The launch of Longboat Quay on Grand Canal Dock involved windsurfers and dune buggies to ferry viewers to the marketing suite. It worked well for Hooke & MacDonald, which took 120 deposits over the launch weekend.
Launched by Hamilton Osborne King in October, Park Developments' and Sisk's Hanover Quay was one of the first developments with show apartments on the south quays and the smartly-furnished units were impressive.
Many of these dockland schemes include a quota of Affordable Housing units, which lucky applicants will be able to buy at a reduced price. The Gasworks at Barrow Street in Ringsend has been a resounding success for Danninger, with 200 sold so far, 70 per cent to owner-occupiers. Another landmark development was the launch of the Phoenix racecourse development last spring, when €110 million in sales were recorded by Hooke & MacDonald.
Around 95,000 units nationwide have received planning permission in the 12-month period to July this year, so supply will be strong in 2005 - perhaps exceeding the 80,000 mark. Investors will be vigilant about interest rate changes, with experts predicting a modest increase of 0.75 per cent in the next 12 months.
Property pension packages put together by brokers were an important sector in 2004 and this is expected to grow.
"Our young population, strong economic performance and flexible lending means the demand for new homes will be sustained for years to come," says Ross McParland of Sherry FitzGerald New Homes.
"Buy as early as you can in 2005," are the parting words from Keith Lowe of Douglas Newman Good.
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