Credit crunch hits holiday haven

2008Review: HOLIDAY HOMES:Even lovely West Cork is suffering from the slump, says Conor Power

'WEST CORK - a place apart" is how the tourist mantra goes. As a long-term resident of this region, I can see what they mean. It's not just the physical distance to get to this corner of Ireland. It feels like a little more than that - it's as if, when you pass a certain point, you have gone through some sort of metamorphosis, where timelines and economic certainties are that little bit off centre.

The distinctive thing about selling property in this region is that there is a large proportion (often the majority) of purchasers who are buying into a way of life rather than making an acquisition for other more 'normal' socio-economic reasons. In fact, the socio-economics don't come into it as much. Those issues are secondary to the simple fact that people like it here and want to buy property here.

But even west Cork has not managed to escape the creeping overspill of the dreaded credit crunch.

The feeling on the ground from all auctioneers I spoke to is that while the first half of the year was relatively quiet, the latter half saw the house-selling market come to a virtual standstill. West Cork property, it seems, can reach a state of 'standstill', but not one of 'collapse'.

"My feeling is that property in west Cork has always been at a premium," says Stephen O'Keefe of James Lyons O'Keefe Auctioneers in the harbour town of Schull, where the main market is in second homes. "The reason it has been at a premium is that the people who buy it are not necessarily in a situation where they have to sell."

In the west Cork market, people are of the mindset that they will sit tight and wait for the storm to blow over rather than having to drop their prices.

"We are currently in a suspended state," says Denis Harrington of Harrington Estates in Bantry, "and waiting for a number of scenarios to correct themselves either organically or with assistance."

Right now, they are facing an unprecedented situation. While there is no credit, there is no buying. The credit freeze is a feature of life in other countries too, so the traditional British market - now the dominant foreign market in west Cork - has also been virtually non-existent for the latter half of the year.

There is a strong tradition of diversifying in order to survive in this neck of the woods, where subsistence farming and fishing went hand-in-hand as the dominant economic activities in the days before a sophisticated property market. Many auctioneering firms have found themselves widening their portfolios of services in an effort to replace lost incomes from house sales. Planning applications, mapping services, valuations and the soon-to-be-enforced energy ratings certificates are some of the areas in which firms have been spending more of their energy.

In towns such as Skibbereen and Clonakilty, which have a stronger semblance of an industrial base, all agents are reporting some movement of property, but only in cases where vendors have reduced prices. Even this is tempered by a sharp drop in sales in the latter half of the year, and many deals falling through due to a lack of loan approval.

Now many firms which had previously ignored rentals are turning their attention to this still-active sector. "Rentals are down to around €850 a month (for a three-bedroom family home) from €900 a month and above a year ago," says Martin Kelleher of SWS in Clonakilty, who notes that commercial lettings in the area are "very slow", apart from in the still-buoyant retail market.

Quite when people will be able to borrow from banks again, to buy new homes, trade up or get a second/holiday home, is impossible to tell. When it does happen, there will be some value to be had. Pat Maguire of Pat Maguire Properties in Skibbereen says that there are now three-bedroom detached houses selling for as little as €200,000, replicating the market of three or four years ago. He sees some "reality creeping into the mindset of vendors - both individuals and developers - who are now dropping their prices". There are stories of one developer dropping his house price from €600,000 to €400,000 and throwing in a smart family car to sweeten the deal.

And the silver lining? "The big advantage of living in west Cork is that, although we do have to listen to the doleful economists on the radio every morning, at least we can look out of the window and see wonderful west Cork - and you can't put a price on that," says O'Keefe.