Will Luas extension lift south county prices?

Homeowners could once count on the Luas effect to boost values – but will the magic work when the Sandyford to Loughlinstown extension opens next month?

OCTOBER sees the opening of the Luas green line Cherrywood extension. Serving Glencairn, The Gallops, Leopardstown Valley, Ballyogan Wood, Carrickmines, Laughanstown, Cherrywood (in Loughlinstown) and Bride’s Glen, the seven-and-a-half kilometre tramline links the southwest suburbs with St Stephen’s Green in a journey time of 40 minutes – and at an approximate cost of €35 million per kilometre.

Can those at the end of the line expect to see a rise in their property prices?

It would be very naive to think prices will go up overnight. Stephen Day, negotiator at Lisney, St Stephen’s Green has managed the sale of apartments at Tullyvale, beside Cherrywood, one of the new stops. He says they were “very slow to sell”.

“The Luas will make properties more saleable, but right now price is 98 per cent of the selling equation. Price is everything.”

A working paper compiled by the ESRI in November 2008 analysed the value of rail transport to homeowners in the greater Dublin area. Its findings may temporarily lift hearts.

It stated that homeowners within 500 metres of a green line station in zone 2 (from Charlemont to Windy Arbour), purchased at or after the Luas opening date, would command a premium of 12 per cent. In zone 3, from Dundrum out, this premium rises to 17 per cent. Good news for the 90,000 people living within a catchment area of one kilometre of the existing track.

But that paper was based on house price figures compiled between 2001 and 2006. “In terms of house price premiums, 17 per cent is worth much less now than it was in November 2008,” says Richard S J Tol, research professor at ESRI and one of the paper’s authors.

The paper is more a general indication that people will pay a premium to live near the Luas, an ESRI report spokesperson concludes.

So does this apply to the new extension? Will it add a premium to property prices? Ronan Lyons, chief economist at Daft.ie, is exploring the ESRI’s figures and comparing them with Daft’s own asking prices. “From preliminary research there is a positive effect of 8-10 per cent on properties at existing stops within one kilometre of the green line,” he says.

This spike in prices is apparent on houses along the Luas green line only. Lyons’ research suggests that there may be a penalty for being too near, or on top of, one of the new red line Luas stops. “Many apartment blocks are on top of stations or at major junctions, which homeowners may prefer not to live next to.”

Not good news, then, for homeowners living near next year’s red line extension to Saggart.

Lyons explains: “The green line is in established areas and a bonus to houses already there, whereas a lot of the red line is in new areas.”

There are already 146,000 people living within a kilometre of the existing red line.

David Lewis, of Sherry FitzGerald Lewis Beirne, is more equivocal about the effect of the red line extension.

“In normal market conditions I’d say yes, proximity to the Luas does affect the price of a property but these are not normal conditions.

“Prices in Dundrum and Stillorgan were positively affected by the opening of the Luas in 2004 but that was in a rising market. Prices should go up before the Luas has arrived, not after. The extension is a distance of three miles and it will sell and help rentals – to what extent, percentagewise, I simply don’t know.”

Being on top of the Luas, however, is a negative selling factor on both lines. Stephen Day of Lisney had an apartment on his books that was too close to the Dundrum stop on the Luas green line. The property failed to sell.

Even if prices do go up, some homeowners living along the green line extension will not benefit. Brennanstown, a stop originally proposed, between Carrickmines and Laughanstown, is not opening in October.

“The lack of development means we’re not in a position to open the stop,” says Ger Hannon, director of corporate services at the Railway Procurement Agency. “Homeowners living there will lose out,” says David Browne of HT Meagher O’Reilly.

Elsewhere along the line the Luas extension is driving interest, if not prices. Browne has sold half-price apartments in Carrickmines Green on Glenamuck Road in Dublin 18, close to one of the new stops.

“The Luas extension has been a big factor for most of our buyers but the properties were also down 55 per cent from their original off-plan prices. Demand was incredible. There was a 1,000 per cent increase in viewings.” Browne took 83 deposits on the launch weekend and says “All prospective buyers walked the estimated 800 metres down to the bottom of the hill to determine the property’s distance from the light rail station.”

He also cites the example of three-bedroom semis in The Gallops, Leopardstown. “We haven’t seen an upturn in capital appreciation but the properties are selling more quickly,” says Browne.

On the green line, the Luas has created a “ripple effect” in terms of the value of properties less than a 15-minute walk to their nearest station, says Geralyn Byrne of Sherry FitzGerald in Terenure. This has negatively affected lesswell-connected parts of Clonskeagh and Goatstown, and the M50 side of Ballinteer.

Pat Mullery of DNG agrees that a property within a 10-minute walk of a Luas station would command a premium. “The Luas has more to offer someone living in Stepaside than in Ranelagh, from where they can walk into town. The bigger impact on house prices will be seen further out the line. I would estimate it to be in the order of five to 10 per cent.”

Buyers are beginning to explore areas outside their historical comfort zones, says Anne Rafferty of Sherry FitzGerald Dundrum. “Sandyford and Leopardstown may not have the same selection of well-established schools as other areas but the tramline opens up some of south county Dublin’s best private schools to a wider catchment area.” She has sold to parents who use the park and ride facilities at Sandyford to deliver their St Mary’s or Gonzaga-going children to the Luas.

Good transport links are a strong selling point. A first-time buyer who has just bought a two-bedroom, two-bathroom apartment costing €190,000 in Carrickmines Green claims location and price were crucial factors. “I’d estimate that proximity to the Luas accounted for 30 per cent of my decision,” she explains.

“Househunters have a wish list,” says Day. Accessibility and orientation are critical. Amenities are crucial, adds Weston Desmond, negotiator at Sherry FitzGerald in Dún Laoghaire.

“Good transport links are a strong selling point. A 12-minute walk is the deal breaker. Anything more than that is not a preferred option for househunters.”

In this market it’s really about saleability rather than price, says Rafferty. “If the property has a broader appeal it will get more people into the house and you have a better chance of selling.”