Tenants and buyers call the shots

Apartment Living: With an oversupply of properties, the apartment market has now come full circle, writes Edel Morgan

This year starts with mixed fortunes for the apartment market but it's also a time of greater choice and competitive pricing for buyers.

The softening of the rental market has meant that investors have been less than active, which has led to a slowdown of sales; meaning it is now taking longer to offload a property.

"Supply is strong and is keeping prices levelled," says Iris Keating of HOK Residential. "A lot more investors are selling up which has added to supply and has affected prices."

Apartments in well-located and efficiently-run developments are still selling well but "situations where you have three-to-four people bidding on an apartment are less frequent than this time last year". Now the key to a relatively quick sale is to keep the asking price realistic. According to Keating, well-priced apartments were generally taking around six weeks to find a buyer.

Apartments in modern developments up to three or four-years-old tend to be more desirable than their more antiquated counterparts. With an abundance of choice, buyers are going for the more polished and contemporary model, with en suites off the main bedroom, high-spec kitchens, car-parking and large balconies or terraces for entertaining.

"Older developments without en suite bathrooms have been struggling to sell," she says.

What little investor activity there is depends on price and location, and there has been an emergence of the small-time investor who is looking to boost their pension fund with bricks and mortar rather than risk the stock market.

Another category is the parent buying an apartment in the city for children attending college, with a view to long-term capital appreciation. The rental market has become so over-supplied that landlords unwilling to maintain their properties to a high standard are having difficulty securing tenants at a decent rent. The average rent for a two-bed apartment in the city centre is €1,200-€1,300. Prior to the euro changeover, city centre apartments were letting for the same amount in Irish pounds.

In some suburban areas where there is a large number of rental properties on the market at any one time, not even a pristine fit-out will guarantee tenants. It is now a tenant's market and, while two-to-three years ago they were offering over-the-odds to secure a property, now they are more likely to negotiate the rent downwards.

Young professionals will often refuse to share a bathroom or live with more than one or two others and are more inclined to ask for luxury items, such as power showers, microwaves and dishwashers, before they will even consider moving in.

There is stiff competition between Section 23 tax-designated developments in some parts of the country with owner occupiers emerging as the main buyers in some cases. Investors are becoming more discerning and are not snapping up tax shelters unless the property is in a good location and is not overpriced.

On the new apartment front, competition has meant developers are having to put in an extra effort to tempt buyers with larger floor space, more substantial balconies, a choice of kitchens and integrated appliances. Another ploy is to dazzle the buyer with the unexpected - like a state-of-the-art kitchen fit-out for a luxury penthouse in a first-time buyer apartment.