On the move

FIONA REDDANon the hunt for a family home

IT HAS taken much consideration, juggling of the numbers, and an ever-expanding collection of Lego to force our hand, but we’ve decided to take that step into the unknown. We’re moving house.

The last time we were in this position, the property bubble was just starting to build considerable steam and like so many people at the time, we got swept up in it. Buying a house then was a frenzied affair. Cancelled viewings because the house had already been sold before you even got to look at it; banks calling you back to offer to lend you an extra €100,000 “just in case”; aspirational brochures and advertising campaigns promising you a better life; agents reprinting brochures for new housing launches because the prices were increasing so quickly.

They were all part of the game and we greedily accepted it as part of getting that all-important first rung on the ladder. After all, did it matter what price you paid when six months down the line you would already have sizeable equity built up in your home?

Well of course, we now know it did matter. It mattered an awful lot, and like many couples who got carried away in the boom we are now hovering on the brink of negative equity. A further shock to the economy could push us over the precipice and take away any dreams of moving on. After all, while negative equity mortgages might be making the headlines, the banks are a lot more coy when you talk to them about actually getting one.

But the upside is that buying a house now appears to be a more measured affair than eight years ago. The frenzy has gone and has been replaced by a less exuberant sense of realism.

So far so good you might say. Except that while the media might be dominated with bad news stories of rising arrears and people waiting anxiously for the forthcoming Personal Insolvency Bill to absolve them of their debts, we are not the only ones looking for a family home in Dublin.

No, in our experience numbers at viewings are steadily rising, while in parallel, the number of family homes coming on to the market seems to have slowed down. Indeed in the first quarter of 2011, 1,058 were listed for sale on myhome.ieon Dublins northside, with more than 1,300 on the south. Fast forward a year and the numbers are down considerably – by almost 20 per cent on Dublin's northside and by a similar amount on the southside. In particular areas the shortages are even more evident.

In Stillorgan, south Dublin for example, just three three-bed houses went on the market from April to June, and six four-beds, according to myhome.ie. On the northside, Glasnevin had just three four-beds on the market in the same period.

This apparent shortage is compounded by the fact that anyone who bought a house in the past 10 years or so and put a lot of money into renovating it, isnt selling. Burdened with negative equity, these homeowners largely have no choice but to stay where they are unless there are mitigating circumstances. And where such houses do come on the market, they tend to attract a significant premium.

We recently viewed a house in a well-established part of south Dublin for example that was more than €300,000 cheaper than a similar house further up the street that had been modernised. That differential could buy you a lot of double-glazed windows and Neff ovens. This begs the question of whether or not such homes are actually on the market. Given the uncertainty out there, it seems that some homeowners are testing the waters – or are “encouraged” to do so by their lenders – by putting their homes up for sale.

Now when you attend a viewing, the first question youll often hear from other prospective home owners to the estate agent is: “Are they (the vendors) really selling?” There could be a market for a new type of “For sale” sign, where “not really” is affixed beneath. We’ve found that one way of assessing whether a vendor would be open to negotiation is to get online and track price drops on the property. If they have already dropped the price, then it’s likely that they’re serious about selling. For putative trader-uppers then, it’s a tricky market to navigate, and one that is largely driven by homeowners who bought their homes possibly decades ago and can afford to sell in the current market.

These homes tend to need a lot of work however, and a commitment to take on board installing new windows, insulation, or reconfiguring layouts – one home we viewed which couldn’t have been much more than 1,000sq ft had five tiny bedrooms.

But if, as expected, the forthcoming property tax is going to be based on property value, a doer-upper might be the financially prudent way to go. Or will it? For those of us out there keen to buy, the tax represents just one more uncertainty on top of all the others. And if no one can predict what might yet happen to the euro zone, a definitive indication on how this tax will work is urgently needed.