Prices have a long way to fall, says Morgan Kelly – but auctioneers say some are near bottom now
THE price of three-bed semis in mature city suburbs may be at or near bottom say estate agents – in spite of what economist Morgan Kelly believes. Last weekend, the UCD professor told a packed audience at the Kilkenny Arts festival that with unsold properties starting to accumulate, we are far from the bottom of the market. He also said that it would take us 10 years to recover from the property crash.
Estate agents say it’s difficult to pronounce on the market as a whole, because in some sectors there’s oversupply, in others, a shortage. Ronan O’Driscoll, a director of Savills, said that prices of apartments, holiday homes and homes in secondary locations potentially have a long way to fall – but traditional suburban homes in good locations are “reasonably close to the bottom”.
However, the residential chief of the Society of Chartered Surveyors Ireland (SCSI) Ed Carey warns that while it’s true that the price of some properties is “bobbing along the bottom”, if people don’t believe the market has bottomed out, it probably hasn’t.
Sherry FitzGerald director Simon Ensor believes that there could be some slippage in house prices, although according to Sherry FitzGerald’s latest property index, average house prices have already fallen by about 60 per cent, not the 50 per cent figure claimed by Professor Kelly.
But he says “The evidence is that there’s a genuine market if the price is right – in a number of cases, we’ve had competitive bidding,” said Ensor. He says that buyers looking for a particular kind of house in a specific location – usually the traditional three-bed semi on a mature estate – find there is restricted stock, because of course, not many people are selling or trading upt.
Although there is an overhang of unsold properties on the market, it is usually those where prices haven’t been cut enough, agents say. The average price for three-bed semis in Dublin, depending on area, is €325,000 to €350,000 says Ensor.
Lisney’s David Bewley says he couldn’t comment on unknowables like when the market will hit bottom, or how long it will take to recover. But he says “I think all estate agents in Dublin will say that they are busier than they were a year ago.”
Vendors tend mainly to be either executors or people who have to sell – “bank encouraged” sales Simon Ensor dubs them. A handful are people who believe now is a good time to trade up. Agents encourage this thinking, saying that prices of very large properties have fallen by more than the 50-60 per cent average.
Says O’Driscoll: “If a €1 million house is now worth €500,000 and your €500,000 house is now valued at €250,000, the monetary gap has narrowed even though the percentage gap is the same. It’s a good time to move up and people are beginning to do that in small numbers.”
Kilkenny estate agent Peter McCreery didn’t go to hear Morgan Kelly’s speak in his city last weekend and he says that in Kilkenny, prices have reached bottom.
“There’s been a rise in viewings and sales in the past few months.” Again, he puts this down to vendors pricing their properties more realistically and says prices have averagely dropped by 45 per cent to 50 per cent.
He says there are less than 150 surplus units in Kilkenny. The average price of a three-bed semi in Kilkenny is now around €125,000 to €160,000.
Who is buying when it’s hard to raise finance? A lot are cash buyers, people who sold their homes at the peak “now coming off the fence, judging that prices are near bottom”, says Ensor. Some are Irish people coming home from abroad. And first-time buyers with steady jobs can get mortgages of up to 90 per cent.
Ed Carey said that there is no magic bullet for fixing the market. He does believe however that banks will eventually have to do deals with people in negative equity – as they have with developers – before there will be movement in the market.
