That 40% drop - it's already happened


Economists have predicted that house prices have to fall by at least 40 per cent from their peak of 2006 but house builders say that’s already a reality, writes JACK FAGAN

NEW HOMES agents have supported a claim by the Irish Housebuilders’ Association (IHBA) that selling prices for newly built houses and apartments have either bottomed out or are close to that stage in the price cycle.

Dominic Doheny, chairman of the IHBA, said earlier this week that prices across the country have dropped by an average of over 40 per cent and that the level of unsold stock was between 35,000 and 40,000. He said that there are 9,000 new homes overhanging the Dublin market – a figure well below other estimates which put unsold properties at 15,000.

Ken MacDonald of Hooke MacDonald said yesterday that judging by the magnitude of the price cuts and the increased number of enquiries and viewings in recent months, there was room for a guarded optimism that the market had bottomed out, particularly in Dublin. “There is now the expectation that we could see the start of a gradual return to an increase in sales activity in the early part of the new year.”

To illustrate the fall in prices, Hooke MacDonald is marketing two-bed apartments at the former Phoenix Park Racecourse in Castleknock. They originally sold at €425,000 and are now 44 per cent lower at €239,000. Two-bed units at Carrington in Santry, first on the market at €375,000, are now down 43 per cent to €215,000. The developers of two-bed live-work apartments at Hyde Square on the South Circular Road have cut prices from €540,000 to €275,000, a drop of 49 per cent. In Rathfarnham, four-bedroom houses at Stocking Wood are back 40 per cent from €695,000 to €415,000.

Sherry FitzGerald New Homes has also noted a pick up in sales since prices were reduced earlier this year. This is particularly true at Wyckham Point in Dundrum where it has sold more that 60 apartments in recent months. One and two-bed apartments are down by 39 per cent, from €560,000 to €339,000 for the larger units, and from €410,000 to €249,000 for one-bed homes. The joint agents are Hooke McDonald.

Eoin O’Neill of Sherry Fitz-Gerald New Homes said there was clear evidence of a recovery in sales where prices had been substantially reduced, in many cases by up to 40 per cent. He noted that some buyers were offering less than the asking price and, depending on their ability to complete the purchase promptly, they were getting the homes.

Deals have been done on a wide variety of schemes, including those at the top of the new homes market, such as the Bloomfield development in Donnybrook where prices are back by at least 40 per cent since the launch in September 2006.

The renewed interest in the top end of the new homes market has led to renewed sales in Castleknock where large five-bedroom townhouses in Farmleigh Wood have been reduced in price by 40 per cent – from €1.75 million to €1,050,000.

In Delgany, six-bedroom houses in Churchfields are now available at €895,000, a drop of 42 per cent on the original price of €1.55 million.

Sherry FitzGerald is also selling one of the lowest priced one-bedroom apartments in the greater Dublin area, a well finished unit at Dunboyne Castle for €129,950, a drop of 54 per cent on the September 2006 price of €285,000.

Ronan O’Driscoll of Savills said that two-bedroom apartments at Clare Village on the Malahide Road in Dublin 17 are “flying” since Albany Homes cut prices from €375,000 to €170,000, a reduction of 55 per cent. In the last month alone, 50 of the apartments, complete with full fit-out, had been sold.

Also going well is Capel Development’s Waterways scheme at Ashtown where the price of two-bedroom apartments has been reduced by 45 per cent, from €450,000 to €248,000.

O’Driscoll confirmed the IHBA view that prices had bottomed but said that, with around 15,000 unsold homes currently available in the greater Dublin area, most builders were selling below cost and it was unlikely that any new building operations would begin until prices bounced back by at least 20 per cent. Gemma Lanigan of Douglas Newman Good’s new homes division said it was obvious that prices in several of their new developments had bottomed out and the homes were selling again. In one scheme, Waltrim Grove in Bray, two-bedroom apartments – originally priced from €440,000 – were now selling at €225,000, a drop of 49 per cent. Three-bedroom apartments are down 47 per cent to €299,950.

Douglas Newman Good has also had considerable success with large family homes in Rathfarnham.

The four-bedroom semis at Butterfield Avenue sold out in one weekend in September after prices were cut from €1.2 million to €599,950.

Not all housing developments in the Dublin area have introduced price cuts. Several developers are holding firm on prices after selling a substantial number of homes off the plans in 2006 and 2007. However, many of the sales have yet to be completed with the now reluctant buyers attempting to pull out. Completing the deals immediately would put them into negative equity.