The property market is awake. Here we go again?
Rumblings about resurgence from estate agents, bankers and brokers are bolstered by rising prices and solid demand in particular areas. So, have we learned anything?
Home dreams: ‘What has emerged is clearly a two-tier market with property located in the greater Dublin area far outperforming all other locations,’ according to one estate agent. Photograph: istockphoto
The madness of crowds can bring an economy to its knees with frightening ease and every decade or so for centuries, the twin forces of greed and folly have come together somewhere on the planet to crush the hopes and dreams of a generation.
Four hundred years ago, frenzied Dutch merchants fooled each other into thinking single tulip bulbs were worth more than tall ships. At the tail-end of the last century, before dotcom became dotbomb, Silicon Valley’s swaggering buccaneers convinced themselves that every tech start-up, no matter how dumb, was worth a million-dollar punt.
In 2008, it was Ireland’s turn to pay dearly for our delusion.
For more than a decade we believed the lies peddled by greedy bankers, developers, estate agents and politicians who all assured us over and over again that investing in property was as safe as houses. Mortgages in excess of 100 per cent were routinely doled out by bankers too lazy to carry out even the most cursory background checks while people terrified of missing the houseboat paid stupid sums for shoeboxes thrown up by cowboy builders more interested in tax breaks than bricks and mortar.
As the madness reached its zenith in 2007, two-up two-downs in Stoneybatter and Pimlico were changing hands for just shy of half a million euro while Victorian redbricks in leafy Dublin suburbs were declared to be worth more than Parisian palaces.
Then the madness came to a shuddering halt and tens of thousands of homeowners saw their paper fortunes torched almost overnight.
Five years on and the financial hangover has yet to lift. Ghost estates have left our landscape permanently pock-marked while hundreds of thousands of homes – up to 350,000 on one estimate – remain mired in negative equity and tens of thousands of homeowners can’t service loans that were given irresponsibly.
But has a corner been turned? And is the property market starting to bounce back? It certainly seems that way. Last month property prices increased faster than at any time since the collapse and according to the Central Statistics Office (CSO), the value of homes went up by 1.2 per cent last month. A similar trend was recorded year on year, the first time since 2008 that prices went anywhere but south over a 12-month period.
There was more good news in a report published this week by estate agency Douglas Newman Good (DNG). The company points towards even larger increases in some areas. It put the recovery in the second-hand house market in Dublin at 7.7 per cent since the start of the year and at 15.1 per cent in the 12 months to the end of June. Converting those percentages to cash paints a clearer picture and, based on the DNG figures, the average price of a second-hand house in Dublin has gone up by €37,500 to €279,000 since last summer.
Of course estate agents have never been shy of talking up the market, often misrepresenting it to a scandalous degree, but the State-run Property Price Register, which went live last year is more detached and it also points towards recovery, at least in urban areas. It shows that the average price paid for a house in the first quarter was €191,320. Dublin houses were priced at €297,574 while the average outside the capital was €140,243.
“[This year] appears to be a turning point in the housing market,” says Keith Lowe, the chief executive of DNG. “What has emerged is clearly a two-tier market with property located in the greater Dublin area far outperforming all other locations. Property prices in the capital are rising by more than 1 per cent a month as demand is clearly out stripping supply.”
One reader, who asked to remain anonymous, has been the beneficiary of the pick-up. He and his wife put their three-bedroom home, in a north Dublin coastal suburb, on the market in February with an asking price of close to €500,000. On the day of the first viewing 120 people walked through the front door and after just three weeks the house went sale agreed for about 10 per cent over the asking price.