The question of making a higher or lower offer
ON THE MOVE:Particularly in desired areas, the difference between asking price and sale price is falling
You’ve found a house you’re interested in, you know the asking price, and you’ve checked out what previous properties have sold for in the area. But the big imponderable is how much will it sell for?
Having just been marginally out-bid on yet another property, we are finding this aspect of house-hunting difficult. Should we bother looking at houses above our budget and end up stressed from a bidding process we were never going to win? Or should we be looking at houses at 10 per cent below to allow for bidding pushing the sale price up?
It’s a question people regularly ask me, and it’s hard to give a specific answer; but from my experience, the gap between asking price and sale price is narrowing – particularly in desired areas where demand is low.
So, to try to work it out, I’ve taken a look at the differentials in price that houses are marketed for, which involves some digging around (why are property portals so quick to delete this information?) and the price that they have actually sold for, which is easily accessible thanks to the property price register.
There are plenty of caveats to the information that aren’t evident from address alone – some houses will simply be more desired, whether it’s the location, or because several interested parties are bidding together. Reduced supply in certain areas will also draw out the buyers.
But it’s worth having a look at some trends nonetheless.
In Dublin city’s north quays a two-bed apartment in Spencer Dock near the IFSC was advertised for sale last year at €195,000 – it later sold for about 5 per cent below, at €186,000. In Ballsbridge, Dublin 4, on the other hand, a one-bed apartment in Herbert Park Lane sold for spot on the asking price, at €235,000.
Here I expected to see upward pressure on prices, but it doesn’t always pan out this way. A four-bed house in Westminster Lawns, Foxrock, for example, went on the market last year for €590,000 and sold for €25,000 or almost 5 per cent less, at €565,000. In Terenure, south Dublin, a four-bed bungalow went on at €549,950, before selling for €522,000, again 5 per cent less. On the northside, a three-bed end of terrace in Raheny went on for €265,000 but it sold for €280,000 - or 6 per cent more than the asking price. But a four-bed on Swords Road in Santry was listed at €260,000, but sold for €245,000, or 6 per cent less.
Luxury homes €1 million +
In Blackrock, south Dublin, a five bed period villa on Sydney Avenue came on the market in September for €1.25 million. By January it had sold for €1.22 million, or €30,000 less than the asking price. A 2 per cent differential. In neighbouring Foxrock, a detached six-bed house on Brighton Avenue was put on the market last year for €1.9 million. It eventually sold for €1.7 million, so a differential of €200,000, or 10 per cent.
On Morehampton Road, in Donnybrook, a four-bedroom period home was listed at €1.3 million, before later sellling for a €1,307,999, a differential of +0.6 per cent.
Around the country it seems there is a higher chance the successful bid will come in at below the asking price. A three-bedroom semi-detached in Oranmore, Co Galway, was put on the market for €180,000 but sold for €157,500, or almost 13 per cent less. A similar property in Glanmire, Co Cork, was listed for sale at €175,000, but sold for 3 per cent less at €169,000. However, desired locations can still push up prices. A five-bed country house in Thomastown, Co Kilkenny, for example, was listed at €500,000 – but sold for 5 per cent more, at €525,000.
What does all this tell us? Not a whle lot, but being prepared to pay 5 per cent more or less than the asking price is to be considered.
The recent Housing Market Monitor from the IBF referred to the shortage of family homes when it noted that the terms of the forthcoming property tax weren’t harsh enough to persuade “empty nesters” to sell up. This may be true, but I’m not sure forcing people to move out by imposing unaffordable taxes is desirable either. The report also failed to touch on was how tracker mortgages are also inhibiting mobility in the market – after all, why switch a loan with interest of 2 per cent or so for one more than double that?