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?
There have been many such stories in recent weeks. A house on Durham Road in Sandymount went on the market with an asking price of €895,000 and sold for more than €1 million and a 1,200 sq ft four-bedroom house on nearby Lea Road went to auction with an advised minimum value (AMV) of €550,000 sold for €710,000. A four-bed semi in Grange Grove in Deansgrange that was quoting €415,000 sold for just over €450,000. A three-bed in Dún Laoghaire went sale agreed in February for €370,000 but the sale fell through. Last month it sold for €410,000.
“The market here is shaping up a bit like the English market,” says Lowe. “London is doing much better than elsewhere and . . . Dublin is definitely outperforming the rest of the country. We have seen nine months of price increases so I think we are turning a corner, although I do say that guardedly and there are still huge challenges to face.”
“We saw a big increase in mortgage applications in April and even bigger again in May with all the growth coming in Dublin,” he says. “Well-located, well-established areas – and that is much broader than just the south Dublin enclaves and Clontarf and Malahide; anywhere that is settled and close to amenities – is doing well now. I would say prices have gone up by around 5 per cent in the past six months alone.”
Ultimately it comes down to supply and demand. And all the demand – and, as a result, the price pressure – is is on a very specific type property, Grant says.
“Even first-time buyers with no children want to buy family homes. They want a place that they will live in for the rest of their lives. The idea that they will buy starter homes and flip them in five years has gone, and I can’t see it coming back. What people want are three- or four-bedroom houses in settled areas close to amenities.”
Not so optimistic
Edward Carey, an auctioneer based in Enfield, Co Meath, is not so optimistic about recovery.
“I don’t want to be preaching doom and gloom, but property is part of a macro economy and it needs a functioning economy to work. I don’t think we have that yet. Until we have a proper functioning economy again, the market will struggle to recover. I can tell you there are very few sales taking place in Enfield.”
He questions the official figures on house prices and says an accurate picture of the property market has yet to emerge.
“For a start, the CSO is saying the average fall from the height of the boom is 50 per cent but I would put it at more than 65 per cent. I was selling houses in Enfield in 2006 for €365,000 and they are down to €135,000 now,” he says.
While prices might have gone up, the level of activity in the market is still low, even in Dublin, and the number of new mortgages being issued is just one-tenth of what it was at the peak. It is far below the levels expected in a properly functioning market where about 3 per cent of properties change hands each year. In Ireland last year, the rate was 1 per cent.
An absence of credit, confidence and equity are to blame but, with prices rising and the economy stabilising, confidence is returning and banks seem more willing to loosen their purse strings now than at any point in the past six years. In June 2012 only two lenders, AIB and Bank of Ireland, were active in the market – and they were hardly rushing to lend money. Permanent TSB, KBC and Ulster Bank are back in the game, with money to lend but stricter lending criteria.