Irish house prices ‘not falling’, says builder Abbey

Withdrawal of the Help to Buy scheme would be ‘a very bad mistake’, it claims

‘Obviously we are not going back to where we were in 2006,’ says Abbey executive chairman Charles Gallagher. Photograph: Alan Betson

‘Obviously we are not going back to where we were in 2006,’ says Abbey executive chairman Charles Gallagher. Photograph: Alan Betson

 

Property prices in the Irish residential market have “already turned” upwards, while the Government should “stick with” its Help to Buy scheme to avoid a negative impact on building levels, the executive chairman of housebuilder Abbey said after the company’s agm on Saturday.

Charles Gallagher referred to a headline, based on a study by Real Estate Alliance, that said three-bed semi-detached houses in Dublin were dropping at a rate of €1,500 a month, “or some other ghastly number”.

Abbey’s experience was “a bit better than that” and after a weaker spell, the market is now “improving a little”, he said.

Sales

Sales in an Abbey scheme in Dunshaughlin, Co Meath, have “gone very well” for the company over the summer, he added. “I don’t think prices are falling. I think they’re stable.”

The average selling price on Abbey properties in the Irish market is “about €300,000”, Mr Gallagher said, adding that he believed it was above this level that the market is becoming “more difficult” due to affordability issues.

A study by MyHome.ie in association with Davy recently found that asking prices declined 2.8 per cent in the third quarter of 2019 compared to the second quarter and were up just 0.3 per cent on an annual basis.

Mr Gallagher referred to speculation that the Government’s Help to Buy scheme could be narrowed or withdrawn and said he believed this would be “a very bad mistake”.

“I think Help to Buy has been a considerable support and help to the market,” he said. “If they were to take that away, there would be an immediate setback, and to do that at the current time would be an error.”

The scheme has been criticised for failing to help buyers on either single or joint incomes of less than about €90,000.

But if it is let expire, it will have to be replaced in another form, “because it is very difficult for people to raise 20 per cent [deposits] to buy a house”, Mr Gallagher said.

“To those people who say it will bring down prices, well, maybe it would, but if it brings down prices, there will be less activity.”

‘Step up’

Abbey is on track to complete 100 units in the Irish market in its current financial year, which runs until the end of 2020. This will be “a step up” from the 37 completed in the previous 12 months, while it is targeting 200 in the medium-term, with a focus on the Dublin commuter belt.

Its ultimate aim is to reach as many as 400 annual completions, though this would require a strong market.

“I would hope, particularly in Ireland, that we should be on a long-term rising trend. But within that we could have a good year, and we could have a bad year,” Mr Gallagher said.

“Obviously we are not going back to where we were in 2006, and I don’t think we would want to, really.”

He noted that building activity was now returning to the regions, citing the launch of an Abbey scheme in Portlaoise at the end of this month. “We think it will go well,” he said.

A slowdown in the UK market, where most of its business is based in the south of England, and sentiment has been hit by Brexit-related uncertainty, may help ease labour constraints in the Republic.

‘Nervousness’

“The UK environment is becoming more challenging as we speak, considerably more challenging,” he said. “There is just nervousness.”

About 83 per cent of Abbey is held by the Gallagher family and shareholders raised questions at the Malahide agm about its future as a listed company in the hope that they would be bought out.

Abbey has not raised money from the market since 1987, but Mr Gallagher said after the meeting that finance-raising was not the only benefit of being a public company.

“If we can maintain the listing, we will. We’re not minded to give it up on a whim, really, or just because of a momentary fashion.”