Market movers
05 September 2010 By Michelle Devane Despite continuing sluggishness in the market, there is still some activity, with much lower prices to be found for buyers who know what they want.
It is four years since the first signs of a wobble in the residential market became apparent. It was the autumn selling season of 2006 when lavish houses started to fail to sell in auction rooms, with many also failing to sell at anywhere near the asking price - or at all - afterwards.
Since then, there’s been a dramatic collapse in property prices and there is a lot of debate about whether prices will fall further or are near their trough. However, even in the depths of recession, there are always people who have the desire and the financial capacity to take advantage of lower prices on offer and buy a home.
For those pondering the merits of buying in a downturn, there is, of course, no question that there’s much better bang for your buck. According to the latest Daft house price report, the average national asking price stands at €220,000, having fallen 37 per cent since the peak.
Two-bedroom apartments are now for sale in the capital for well under the €200,000mark and sought-after two-bed terraces are on the market for about €300,000.
Traditional three-bedroom semi-detached houses are now for sale in the city’s suburbs for between €350,000 and €600,000.
For first-time buyers, prices are thus much lower, but this must be balanced against a lower availability of finance and, in many cases, lower incomes. For those trading up, the balance is between accepting a lower price for their existing property and the savings on the new one.
No one is clear what the trend in prices will be this autumn. Even in the last 12 to 18months,the asking prices in the residential market have dropped substantially. In January 2009, a three-bedroom apartment in Longboat Quay in the south Dublin docks was sold for €550,000 and a two-bed mid-terrace on Howard Street in Ringsend was quoting €530,000. Today, a similar apartment in Longboat Quay is on the market for €345,000 and two-bed mid-terraces in Ringsend are quoting in the region of €350,000.
Price reductions have continued in the last few months - and if this continues - the autumn season could see a deluge of fine houses at much reduced prices. Last March, Blithe House in Greystones, Co Wicklow, came on the market at €1.395 million through Sherry FitzGerald. This week the agent has made a massive price cut on the well-appointed Edwardian family home in The Burnaby, in a bid to generate buyer interest. It is now for sale for €825,000.
Some properties are selling. Estate agents around the country have reported a good level of sales during the summer months, though at low levels. But it appears most people are only moving if they have to, not because they want to. ‘‘Why would you move?” as one agent put it. ‘‘I’m afraid to say on a human level why would people put themselves through the stress of buying - having to secure a mortgage and deal with rising interest rates.”
For many people, moving is still too costly. According to Declan Cassidy, managing director of Gunne Residential, the properties that are likely to come on the market in the next few months will comprise executor sales, sales of second homes and sales of houses, where the owners have unfortunately lost their jobs.
First-time buyers are not in the same predicament - that segment has kept the overall market moving. First-time buyers remain the single largest segment of the market in volume terms, accounting for 38 per cent of all loans drawn down in the second quarter of the year, according to the Irish Banking Federation. Overall, the volume of new lending in the three-month period was down 38.3 per cent compared to the same quarter in 2009.
Cassidy, who manages the Fairview office, said first-time buyers were snapping up ‘‘anything around here between €200,000 and €400,000 in north Dublin.
‘‘For €400,000 you can now get an extended three-bed semi in Drumcondra, Fairview, Marino and parts of Killester,” he said.
According to estate agents spoken to last week, prices of mid-range family homes are stabilising, particularly in sought-after areas of the capital, such as Ranelagh, Rathgar, Drumcondra and Glasnevin.
Stock that came on the market under the €700,000 mark has done well overall with sales agreed on many properties within four to six weeks.
Christopher Bradley of Sherry FitzGerald’s Ranelagh office, which handles sales in Milltown, Rathgar, the South Circular Road and Kilmainham areas said the most realistically priced houses were now selling for the asking price, if not slightly in excess.
Large family four and five-bedroom homes have seen some of the greatest price drops. In Ramleh Park in Milltown for example, Gunne Residential has a four-bedroom semi-detached redbrick on its books for €985,000 - smaller houses in the mature cul-de-sac of 1920s-built houses off Milltown Road were sold for about €1.3million in the boom.
Sherry FitzGerald’s Ranelagh office recently agreed the sale of two houses in Ramleh Park, both of which were asking €495,000. The agent said one went for more than the asking price, while the other went for just shy of it. Both were three-beds and both sold within eight weeks.
The same agency is handling the sale of 4 Bannaville in Ranelagh, a two-bed villa style off Mount Pleasant Terrace. With an asking pr i c e of €450,000, it has come on the market at 2002 price levels. In 2002,the former home of Senator Fiona O’Malley was auctioned with a guide price of €360,000, was withdrawn at €395,000 and sold after for €440,000.
According to research conducted by Sherry FitzGerald, the average selling time has reduced to seven weeks (from instruction to sale agreed) from an average of 16weeks last year and 22 weeks in 2008.
Michael Grehan, managing director of Sherry FitzGerald, said the reduced sale time year on year can be put down to the property market finding a new level.
‘‘Buyers and sellers tend to come to a meeting of minds more easily now compared to when the market was plummeting a couple of years back,” Grehan said. ‘‘Those who want to sell know what they have to do to entice a buyer. Equally, those viewing properties take encouragement from the volume of viewers out there and accordingly are quicker to come to positive decisions and, in many cases, find themselves competing with other bidders.”
Grehan said the length of time that it took a sale to go from sale agreed to signed (not closed) had increased by nearly three weeks from six to nearly nine weeks on average, due to the protracted due diligence that tends to go with every sale.
‘‘Another notable change in the market is the reduced time between contracts signing and actual closing date,” he said.
‘‘In many cases, sales are now being signed and closed on the same day with the average closing date happening within two weeks of the actual contract signing date. This is a reversal of what was happening some years back, in that the time between contracts signing and closing was much longer and the time between sale agreed and signing much shorter.”
Iris Keating of Douglas Newman Good’s Dublin city centre branch has noticed a similar pattern. She said the appetite for buying is ‘‘much stronger’’ now than earlier this year.
‘‘Sales are happening more readily, owners are more realistic about their prices and buyers are quicker to make bids,” Keating said. ‘‘The houses that come to the market where the refurbishment has already been completed are doing really well largely due to the short supply. But a lot of people are holding off on selling their houses because it’s not making sense financially.”
The mid-range stock would appear to be stabilising, but the autumn market may bring bad news for Dublin’s largest homes. Ronan O’Driscoll, director of Savills Residential, said he expected the autumn to bring an increase of trophy homes on to the market. ‘‘We’ve had hardly any trophy houses, but I know they are coming,” O’Driscoll said.
‘‘With all the receivership stuff that’s happening, it’s inevitable that some Celtic Tiger houses are going to come to the market. Some of them are likely to be houses on Shrewsbury Road and Ailesbury Road. Whether there will be demand for them is questionable, but there’s probably people waiting to pounce. It’ll be interesting to see what happens.”
Ciaran Cassidy, divisional director and branch manager of Lisney in Terenure, believes houses at the upper end will see more price cuts.
‘‘Those in the €2 million to €3 million price range will see more drops,” Cassidy said.
‘‘But good three/four bed semis are selling. Houses that don’t need much work and obviously houses in good locations are selling well. The bulk of stuff we’ve sold this year has been well located, close to villages and schools where amenities are within walking distance.”
Traditional three and four-bed semi-detached houses in Rathfarnham and Terenure are on s ale for between €350,000 and €650,000, with the redbricks generally achieving €650,000 to €750,000 and even €800,000, according to Cassidy.
He said such the traditional houses are in demand from those seeking to trade up with the interest mainly from couples who sold their home in a plummeting market and have been renting since.
In Lisney’s Drumcondra branch, Darren Chambers said trader-uppers were seeking traditional three-bedroom semis with parking to the front and a large back garden.
‘‘They want the boxes ticked: parking, side access, the house facing the right way,” Chambers said. ‘‘They are all deal breakers now, where as they were once glanced over. What is difficult to sell is the do-er upper, because it’s nearly impossible to get money to do up a house.”
In Cork, Catherine McAuliffe, director of Savills, said the majority of buyers were those who sold houses in the last few years and had been renting since.
‘‘You could call them market watchers who’ve been waiting,” McAuliffe said. ‘‘The buyers are mainly families purchasing houses priced between €450,000 and €650,000.”
McAuliffe said Douglas, Bishopstown, Rochestown and Blackrock were the areas in most demand. In Rochestown, she said she recently agreed the sale of a five-bedroom detached house in Mount Oval Village, which measured 3,000 square feet, for about €650,000.
The asking price was €680,000 and it had been on the market at the beginning of 2009 for €780,000.
First-time buyers in Cork can now buy a three-bed semi in the Douglas area for between €200,000 and €250,000.
‘‘A do-er upper, 1940s built three-bed semi in a mature area in Dogulas will cost between €350,000 and €400,000, but they might have to put in another €100,000,” he said.
‘‘People are always looking for do-er uppers, but they need to have the savings.”
All of the agents conceded that prices were likely to fall further, but they maintain that when it comes to certain areas and house types in cities, the prices have stabilised.
Economist Jim Power said he was ‘‘far from convinced’’ that the property market had bottomed out. He anticipated that house prices could fall by as much as 12 per cent this year, that housing completions could be lower than 12,000 and he doesn’t believe there will be any meaningful recovery in 2011.
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