Where have all the family homes gone?


With the property market still stagnant, some growing families are bidding for bigger houses in established areas. But there aren’t enough family-sized homes going on sale to meet demand, writes FIONA REDDAN

PROPERTY PRICES are continuing to fall, banks are still restricting lending, and the economic outlook remains volatile. If there are green shoots, however, they are to be found in the family home market, with demand on the rise for three- or four-bedroom homes in established parts of the capital. The supply of such properties, however, continues to decrease, and despite innovations in the mortgage market, the expectation is that this will only have a limited impact.

For Ronan O’Hara, director of Savills’ Blackrock office, the situation is “like a drought”.

“We can’t get enough stock of three- and four-bedroom semi- and detached homes, in all the established areas along the Dart line, as well as Foxrock and Mount Merrion,” he says, adding that his agency is getting a “serious amount of inquiries” for houses in the €300,000-€600,000 price bracket.

On Dublin’s northside, Martin Doyle, branch manager of Sherry Fitzgerald, Drumcondra, is having a similar problem. His agency recently had a 3-bed family home in good condition in Shandon Park, Phibsborough on the market recently at €330,000. According to Doyle, it attracted huge viewings and sold within two weeks for over the asking price, with five to six parties bidding on it.

Sinead Beggan, a director of McGuirk Beggan Property in Terenure, Dublin 6w, has gone from a stock of over 20 houses in January to just 12. “Replacing that stock is becoming a real problem at the moment,” she says, pointing out that the bulk of the activity in the market is in this type of property.

According to statistics compiled by Myhome.iefor example, in the first three months of the year there were 14 per cent fewer four-bed homes on the northside of Dublin than in the same period in 2008. And there was a similar percentage difference for three-bed homes on Dublin’s southside during the same period.

And across Dublin, agents are reporting increased viewings. “It wouldn’t be unusual to have 30-40 parties at a viewing,” says Doyle, while Kaye adds that she is seeing “terrific activity” in appointments. “I haven’t seen this level of activity for quite some time,” she says.

But what’s causing the “drought” of family homes?

For O’Hara, it comes down to the fact that there are really only three sources of vendor at the moment: those for executor, marital and financial reasons.

“It’s almost a stand-off; people who’d like to move can’t, because the values of their homes are so low they say, ‘I’m not prepared to sell,’” he says.

Doyle agrees.

“A lot of sellers feel that prices are at a level that they’re not happy with. They don’t want to sell and will wait and see if the market wants to improve,” he notes.

The other issue remains the lack of access to credit, which is making people stick with the houses they’re already in.

“It’s like a log-jam; people who’d like to trade up can’t because the banks won’t entertain them,” says O’Hara.

But demand continues to increase, as those sitting on the sidelines for the past three or four years look to make a move.

“Values are now at such at a level that buyers who were sitting it out for the last three or four years feel comfortable to engage again. One comment we’ve gotten is from people saying, ‘we’re sick of renting, we want to have our own place,’” says O’Hara.

“A lot of people who sold and are now in rented accommodation are waiting for the right house to come up,” agrees Doyle.

Beggan has noticed increasing demand from “mature” first-time buyers in their late 30s or early 40s who made the decision not to get in the market for various reasons, but are now “coming back out with force”.

While in normal circumstances one could expect such demand to push up prices, in this economy prices continue to fall. However, when in-demand houses come to the market, they do sell – and often sell quite quickly.

“All the houses we’ve brought on the market since January have sold, and gone sale agreed within two or three weeks,” says O’Hara. Doyle Doyle points out that while people often come in with low offers, a house that’s in demand and has had multiple parties bidding will, in some cases, sell for over the asking price.

Of course, part of the increase in demand is the fact that those prepared to sell are prepared to do so at a realistic price, with all agents indicating that they don’t want to list properties that don’t have asking prices in line with current values.

“A house that does reflect an accurate value will sell and will sell well,” says Beggan.

But will the situation change?

Agents are hopeful that new initiatives in the mortgage market will encourage homeowners, who have to date been trapped by negative equity or the value of their tracker, to move.

Last month, Ulster Bank announced it would allow homeowners to trade up – or down – and bring their tracker mortgage with them, while more recently Bank of Ireland revealed a new negative equity mortgage, which will allow people to effectively bring their debt with them to a new property.

For Doyle, however, such initiatives will more likely help those trapped in apartments to move, rather than boost the supply of family homes.

“I don’t think that’s going to help hugely in the family home market. It might mean people in smaller houses and apartments would trade up,” he says.

“I think what will probably happen is that it will be good in very niche circumstances,” says Frank Conway, a director with the Irish Mortgage Corporation, adding that he doesn’t see it being applicable to the “mass market”.

In this context, it will be homeowners needing to relocate for their jobs, or couples who have outgrown their two-bed apartments and want to maintain their level of debt, but swap the apartment for a three-bed semi, that are likely to avail of the product. Of course, whether homeowners will be able to sell two-bed apartments – particularly in the commuter belts – will be another issue.

Those already happy in their three-bed semis, however, are unlikely to be enticed by such offers to trade up just for an extra bedroom.

“They’d rather stay put and extend,” Conway says.