Real Estate Alliance

THE DISCERNING BUYER IS KING IN 2004

Real Estate Alliance Announce Property Market Summary for 2004
Thursday, 30th November 2004

National property group, Real Estate Alliance today announced its summary of the property market in 2004. Following a group survey member feedback revealed that the market has remained steady in 2004 and Real Estate Alliance members are looking forward to another successful year in 2005 with members predicting that residential property will increase at a rate of approximately 5% - 8% in 2005. However, the most significant factor to appear this year according to Real Estate Alliance was the rise of the “discerning buyer”.

Phillip Farrell, Chairman of Real Estate Alliance commented; “Over the past number of years there has been a trend of buy, buy, buy in the marketplace. Now we are seeing an increase in the number of discerning buyers. These are educated people who weigh up all the options before going ahead and they are more conscious of what constitutes a ‘good buy’. Essentially the owner/occupier market is seeing more educated buyers as the Irish are becoming wiser when it comes to property.”

The residential market has seen an increase in price at an average of 8% - 10% in 2004. There has been a noted difference in the buoyancy of the market in certain areas of the country with some areas faring better than others in 2004. Prices nationally have risen with areas such as the commuter belt outside Dublin and areas marked for decentralisation coming in at the higher end of the scale for price increases.

It has been a competitive year for second hand residential property with second hand properties increasing between 5% and 10%. Real Estate Alliance members noted that stamp duty is continuing to have an effect on this market as new homes are perceived as being better value. “Stamp duty is turning buyers off second hand homes and is holding back this market. We have called on the government to deal with this issue and have highlighted and the need for reform in the stamp duty system. Real Estate Alliance will not be satisfied until there is a standard stamp duty rate of 3% for both commercial and residential property with first time residential buyers exempt up to €250,000. We also recommended that stamp duty be index linked to the rate of annual inflation to keep the price in touch with the level of market affordability” commented Phillip Farrell, Chairman of Real Estate Alliance.

In the new homes market developers are being forced to improve their products as competition in the new homes remains strong. Feedback from Real Estate Alliance members indicated that this area may become price sensitive in the new year as supply is starting to meet demand. Apartments, in particular, may increase at a slower rate in 2005 as supply meets demand. Despite this prices in the new homes market have risen between 8% and 10% on average.

A poor rental scene has meant a slow down in the residential market for investors as rents are down approximately 10%. As such, investors are being forced to look for opportunities in the commercial sector with strong prices being paid for opportunities in this area. Retail is the strongest area of investment and rents in this area have remained high with prices increasing up to 20%, depending on location. As shopping becomes a leisure pastime and rents are stable both in high street locations and in shopping centres the next 12 – 24 months in the retail sector looks set to be extremely buoyant. There has also been a huge increase in commercial investment abroad which can be linked to the fact that stamp duty here is at 9% which is causing investors to look elsewhere. Real Estate Alliance Chairman Phillip Farrell commented that “we need to reform the stamp duty system or in 2005 the lack of opportunity in the Irish market will drive investors abroad.”

Other areas of the commercial market were sluggish in 2004 with office space and industrial still slow to move in 2004. The sluggish office market has been due mainly to oversupply, especially in prime areas, but the consensus within Real Estate Alliance is that this market should ease over the coming year with central locations and high quality office parks the first to feel the resurgence. The industrial sector is also stagnant with a lot of supply and very little uptake.

There is still very strong demand around the country for development land. The price of land for development is up across the board with the biggest increases seen in areas such as Leitrim where prices are up approximately 20%. Prices for development land, especially ‘ready to go’ land where planning has already been secured, are increasing all around the country as demand is high and supply remains low. Wicklow, Clare and Sligo have seen increases of approximately 10%, while Cork city and Carlow have increased 15%.

WHAT’S HAPPENING AROUND THE COUNTRY……

It’s no surprise to learn that it has been a busy and very successful year for properties in the ‘commuter belt’ surrounding Dublin. Figures from Real Estate Alliance members indicate that residential prices in Kildare and Meath have risen between 7% and 10% on average with apartments seeing the greatest increase in price of up to 10%. In Wicklow prices have risen up to 12% for two bed apartments thanks to a number of high quality new developments. Second hand homes have also been selling well in Wicklow in 2004 with prices increasing between 10% and 12% during the year.

It has also been a strong year in Dublin for house prices. New homes have remained strong although increases have slowed in the latter part of the year as supply is starting to meet demand. In second hand homes middle range properties, between €275,000 and €400,000 are faring quite well. However, the marketing period for these types of houses has extended to 4 – 6 weeks. Traditionally this period would have been 2 – 3 weeks for properties of this sort however prices have hardened and the impact of stamp duty has meant that there are a few less buyers therefore it can take a longer period of time to find a buyer for these type of properties.

Areas marked for decentralisation have also proved popular with buyers in 2004. The ‘early movers’ for decentralisation i.e. those departments due to relocate in 2006 and 2007, such as Carrick-on-Shannon, Athlone, Carlow and Mullingar have noted a particularly sharp increase. Three to five bedroom properties have risen up to 8% in price. New homes in Athlone have increased at approximately 5% while in Carlow the greatest increases were seen in 4/5 bed homes with gardens and one bed apartments. Second hand homes in these areas have also been increasing steadily with a rise of approximately 6%.

Along the west coast Sligo has seen the greatest increases in 4/5 bed new homes which rose 7% in 2004 with second hand properties and new apartments have increased approximately 5%. The biggest increase in Clare however was in second hand one and two bed apartments and three bed semi-detached homes which rose up 7% while new homes lagged slightly behind with an increase of 5%.

The south of Ireland also fared well in 2004 with the price of new homes rising between 8% and 12% while second hand homes rose between 5% and 10% depending on location. The greatest increase in Cork was in three and four bed semi-detached and detached properties. New two bed apartments were in good supply in 2004 and demand has remained strong in Kerry with prices for two bed apartments rising up to 12%.

Clients of Real Estate Alliance members benefit from:

• Real Advice - Because member firms are locally-rooted and independently owned, they have first-hand market knowledge that ensures clients make only the best-informed real estate decisions.
• Real Commitment - Member firms are well established, leading local businesses built on delivering the best results for their clients.
• Real Service - Real Estate Alliance member firms have the detailed understanding of the local property issues facing clients to ensure that they provide a superior range of client services.
• Real Professionalism - As Ireland's highest-qualified property professionals, Real Estate Alliance sales staff are members of the IAVI or the SCS, the representative bodies for Ireland's top property professionals.
• Real Confidence - IAVI members complete far more property transactions than any other professional group. Real Estate Alliance member firms harness this transaction volume to seize opportunities and speed the transaction process for you.
• Real Coverage - With more than 450 professional staff in 40 offices located nationwide, Real Estate Alliance member firms can provide the best real estate advice locally and nationwide.
  

  For further details please contact Kirsten Connolly, Plunkett Communications on 01 662 0335/ 087 3939 991 or email kirsten@plunkettcommunications.com

  NOTE TO EDITORS

  Real Estate Alliance is a strategic marketing alliance comprising some of the country's best-established auctioneers and estate agents. Our key focus is on locally-owned and established estate agents. With one quarter of the alliance's firms in business for more than a century, and with an existing IAVI president & five IAVI past presidents among the group's members, the alliance is characterised by the established strength of its membership. In addition, membership is only open to firms led by members of the Irish Auctioneers & Valuers Institute or the Society of Chartered Surveyors.

  Clients of REA members benefit from:

  Real Advice

  - Because member firms are locally-rooted and independently owned, they have first-hand market knowledge that ensures clients make only the best-informed real estate decisions.

  Real Commitment

  - Member firms are well established, leading local businesses built on delivering the best results for their clients.

  Real Service

  - Our member firms have the detailed understanding of the local property issues facing clients to ensure that they provide a superior range of client services.

  Real Professionalism

  - As Ireland\'s highest-qualified property professionals, REA sales staff are members of the IAVI or the SCS, the representative bodies for Ireland\'s top property professionals.

  Real Confidence

  - IAVI members complete far more property transactions than any other professional group. Our member firms harness this transaction volume to seize opportunities and speed the transaction process for you.

  Real Coverage

  - With more than 400 professional staff in 40 offices located nationwide, our member firms can provide the best real estate advice locally and nationwide.