REA

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Renters Paying Twice as much as paying mortgages26 September 2017

Renters are moving home to their parents in ever-increasing numbers in an effort to get on the property ladder, according to a national group of estate agents.

With rents exceeding average monthly mortgage costs around the country, tenants are finding that the only way they can raise finance is to abandon independent living in the short term and return home.

“It is increasingly difficult for first-time buyers to save deposits and purchase properties due to the combination of high rental and childcare costs,” said Anthony McGee of REA McGee in Dublin 24.

“There are lots of instances where we are seeing people moving home to parents to save deposits.

“Even though the rents they are paying are in excess of a mortgage on the same property, they can’t seem to attain a mortgage due to their inability to raise money for a deposit.”

The rental market is being squeezed ever upwards by a perfect storm caused by tenants renting on a much longer basis according to REA spokesperson Healy Hynes.

“Tenants traditionally moved around in the hunt for better and cheaper accommodation, but this is no longer the case, and tenancies are becoming much longer,” said Hynes, a specialist in the area.

“This means that there are less rental properties on the market, and those that come up are very often being converted to Airbnb usage.

“All of this has heated a rental market where average rents nationwide are now €1,017.15, having risen 2.8% in the past quarter.

“In contrast, the cost of servicing a €200,000 25-year mortgage on the REA Average Three-Bed Semi price of €221,843 would be €969 at current rates.

“This difference is made even starker when you consider that the average rental price is based mostly on two-bedroomed apartments, not three-bed semi-detached houses which obviously command a higher rent.

“Although 60% of rental properties in the country are now covered by rent pressure zones, they are simply a fire-fighting exercise as it will be 2020 before we can evern hope to see a sufficient supply of new homes coming on to the market.

Dublin agent Ed Dempsey believes that the rental market is a huge problem in Dublin, fuelled by the migration of properties in the capital to Airbnb.

“There are currently 3,000 properties available to rent on Airbnb that would otherwise be in the rental sector. In contrast, there are just 1,000 properties available to rent on the long-term market,” said Dempsey.

REA agents in Balbriggan are finding that in some cases prospective buyers can halve what they are paying rent if they purchase a property in the area.

“If renters can obtain mortgages they are willing to buy sooner rather than later, as in many cases they are halving their rental payments,” said John Cumisky from REA Cumisky.

“Rents have gone through the roof in the area fuelled by an all-time low of supply of suitable rental properties, with many prospective buyers trying to escape from rents of €2,000 a month in Dublin.”

In commuter areas, buying is still far preferable to renting according to Brian Farrell of REA Brophy Farrell in Naas.

“Assuming that an average house priced at €260,000 in Naas will rent for €1,500 per month, a mortgage of 90% loan to value (LTV) will cost 75% of that amount to service, at €1,132 per month.

“When you factor in the cost of mortgage protection insurance, house insurance, property taxes and general repairs and maintenance these figures work out at a similar amount on a month to month basis.”

The traditional investor who buys a three-bed semi and rents it out appears to be retreating from the market on a monthly basis to be replaced by the ‘Air Investor’ according to Robert McGreal of REA McGreal Burke in Castlebar.

“If we take Westport, for example, there are 14 properties listed to rent, 166 for sale, but 250 listed as currently available on Airbnb,” said the Mayo auctioneer.

In Tipperary a significant number of renters, mainly people who have settled in the area over a long term from Eastern Europe, are now opting for the security of home ownership.

“This category of buyer now makes up 50% of our three-bed semi sales. Many of them have substantial savings and recognise that mortgage payments are now significantly less than the rent that they are currently paying,” said Eoin Dillon of REA Dillon in Nenagh.


Ends

Available for interview:
Healy Hynes, REA spokesperson
healy@hynes.ie 087 263 2295
Media information: Darren Hughes, 086 293 7037, Darren@mediaconsult.ie





Q3 2017 REA Average House Price Survey25 September 2017

The average three bed semi-detached house nationally has risen by 3.1% to €221,843 since June, the Q3 REA Average House Price Survey has found.
The REA Average House Price Survey concentrates on the up-to-date actual sale price of Ireland's typical stock home, the three-bed semi, giving a real-time picture of the property market in towns and cities countrywide to the close of last week.
Overall, the average house price across the country has risen by 11.2% over the past 12 months – just under twice the 6% increase registered to the full year to September 2016.
The average three-bed semi-detached home in Dublin city’s postcode districts has jumped in value by €17,000 in the three months to the end of September, and now costs an average of €431,500.
The 4.1% rise over the last quarter means that prices in the capital’s postcode areas have increased by 15.6% over the past year, with properties selling in an average of four weeks after hitting the market.
“Supply is the main driver of these continuing price rises with our agents reporting that the volume of listings is down around the country,” said REA spokesperson Healy Hynes.
"In what is becoming a vicious circle, families looking to trade up are not seeing the larger homes becoming available while empty nesters looking to downsize do not have a ready supply of smaller homes emerging on the market.
“To complete the equation, first-time buyers are not seeing the three-bed semis coming through in sufficient numbers.
“Although planning permissions rose by 55% year-on-year in Q2, the 3,630 houses approved will not be on the market for the next two years, and even then this year’s overall figure will be less than half is what is required on an annual basis.
“Looking at the supply figures, it could be 2020 before we see any normalisation in the marketplace.
“Our agents are reporting that where there are new builds coming on stream, the market is extremely active and the first-time buyer is opting to pay a premium of 15-20% higher than the second-hand rate.
“This is having a knock-on effect into the second-hand market with a more discerning buyer now concentrating heavily on energy ratings.
“Where the price is right, we are seeing a good flow of credit into the market, with cash buyers now just making up 20% of the commuter market and sales in Dublin and surrounding counties closing in just four weeks – down from an average of seven a year ago.”
The commuter counties continued to rebound after a relatively static 2016 and saw an increase of 2.7% this quarter, with the average house now selling for €229,300.
However, once again the influence of house pricing relative to the deposit threshold is illustrated in a 4.7% rise in Meath where the average is €234,375 almost twice the percentage increase registered in Kildare (1.8%) and Wicklow (2.4%) where average house prices are above the €260,000 mark.
The commuter flight has once again spread as far as Laois where REA Seamus Browne reports a €10,000 increase in average prices over the past three months as buyers leave Dublin and Kildare in the quest for suitable housing at the right price.
The slowest growth nationwide was registered in the main cities outside of Dublin, as while Galway at €255,000 (up 4.1%) and Limerick at €190,000 (up 2.7%) showed growth, Cork city prices remained static over the three-month period, and just 5.1% up on the year.
The country’s smaller rural towns situated outside of Dublin, the commuter belt and the major cities out-performed the national index with prices rising by an average of 2.8% over the quarter to €142,867.
House prices in Longford have risen by 32% in the past year – but the county still has the cheapest semi-detached houses in the country at an average of €90,000, up from €68,000 in September 2016.
Longford, Leitrim (€97,000) and Donegal (€93,750) are the three counties where properties can be still be purchased for a five-figure sum.
Despite the absence of sterling buyers because of Brexit and the exchange rate, prices in some parts of Donegal have risen by an average of €6,250 since June, fuelled by an acute lack of supply of suitable properties.
Brexit is having an unusual effect on the rental market in West Cork where former sterling buyers are now opting to rent on a long-term basis, creating added pressure on an under-supplied market, according to REA Celtic Properties.

Ends

Available for interview:  
Healy Hynes, REA spokesperson, healy@hynes.ie, 087 263 2295
Media information: Darren Hughes, 086 293 7037, Darren@mediaconsult.ie

Q2 Average House Prices 201726 June 2017

The price of an average house in Dublin rose by 2.6% in the second quarter of this year with three-bed semis in the capital now taking as little as three weeks to sell.
The average three-bed semi-detached in Dublin city now costs €414,500, a rise of €10,000 (2.6%) over the last three months and an increase of 14.1% over the past year, the Q2 REA Average House Price Index has found.
And REA agents in areas of south Dublin such as Tallaght, Clonskeagh and Dun Laoghaire are reporting that properties which took seven weeks to sell a year ago, are now moving to sale agreed in 21 days.
The REA Average House Price Survey concentrates on the actual sale price of Ireland's typical stock home, the three-bed semi, giving an up-to-date picture of the property market in towns and cities countrywide.
The average semi-detached house nationally now costs €215,269, the Q2 REA Average House Price Survey has found – a rise of 2.5% on the Q1 figure of €209,944.
Overall, the average house price across the country has risen by 11.2% over the past 12 months – in contrast to the 4.5% increase registered to the full year to June 2016.
While new building is still in its infancy, new developments on sale in small pockets of the country have had an impact on the price and demand for second-hand properties locally.

Agents have been reporting that where there are new homes available, the price of second-hand properties has been under pressure,” said REA spokesperson Healy Hynes.

“Most of our national housing stock is over a decade old, and house purchasers – especially first-time buyers – will opt for new builds at a higher spec, even if there is a marked difference in price.  

“Our agents are also reporting that both purchasers and three-bed semi vendors are looking for larger homes, which is having an adverse effect on the supply chain, with the result that time taken to sell is now four weeks on average in Dublin and the major cities, and as low as three in some parts of the capital.

The commuter counties Louth, Meath, Kildare, Wicklow, Carlow and Laois continued to rebound after a relatively static end to 2016 and saw an increase of 2.6% in the quarter, with the average house now selling for €223,267.

Prices in the major cities of Cork, Galway, Limerick and Waterford rose by 1.9% in Q2 and 9% on the year, the survey found.

The average three-bed semi now costs €311,000 in Cork (+2%), €245,000 in Galway (+2.1%) and €185,000 in Limerick (+3.9%) and Waterford €190,000 (0%) with first-time buyers opting for new homes as the reason for static pricing in the latter location.

The biggest percentage increases over the past three months came in the country’s smaller rural towns situated outside of Dublin, the commuter belt and the major cities.
Prices here rose by an average of 2.8% over the quarter, with a three-bed semi now costing €138,183 on average – a rise of 12.3% over the past year.

However, uncertainty over Brexit has resulted in a significant downturn in turnover for agents in some border areas.

Prices for three bed semis have remained at €85,000 in South Donegal for the past three quarters, but this masks a huge drop off in business from the North according to REA McElhinney in Bundoran.

“There is an overall hit to confidence and to people’s willingness to make a major financial commitment to property while there is uncertainty over the border,” said Michael McElhinney

Ends

Available for interview:
Healy Hynes, REA spokesperson and auctioneer
healy@hynes.ie 087 263 2295
Media information: Darren Hughes, 086 293 7037, Darren@mediaconsult.ie



Q1 2017 Average House Price Survey27 March 2017

The price of an average house in Dublin rose by 3.9% in the first quarter of this year as the average three-bed semi in the capital breached the €400,000 barrier.
The average three-bed semi-detached in Dublin city now costs €404,167, a rise of €15,000 (3.9%) in the last three months and an increase of 12.8% over the past year, the Q1 REA Average House Price Index has found.
And with an increase in newly-financed buyers coming to the market, prices rose by 5.6% in both north and south county Dublin in the first three months of the year.
The easing of the Central Bank restriction on lending for first-time buyers has had an immediate effect on the market with a large rise in numbers at viewings and potential buyers with mortgage financing.
The REA Average House Price Survey concentrates on the actual sale price of Ireland's typical stock home, the three-bed semi, giving an up-to-date picture of the property market in towns and cities countrywide for the first three months of the year.
The average semi-detached house nationally now costs €209,944, the Q1 REA Average House Price Survey has found – a rise of 3.5% on the Q4 2016 figure of €202,926.
Overall, the average house price across the country has risen by 10.9% over the past 12 months – a marked increase on the 7.7% rise registered to the end of December 2016.
The biggest percentage increases over the past year came in the country’s smaller rural towns situated outside of Dublin, the commuter belt and the major cities.
Prices here rose by an average of 12.9% over the year, with a three-bed semi now costing €136,194 – an increase of 3% in the past three months.
The commuter counties of Louth, Meath, Kildare, Wicklow, Carlow and Laois rebounded after a relatively static end to 2016 to rise by 2.9% in the past three months, with the average house appreciating by over €6,000 in the quarter.
Ireland’s major cities outside the capital experienced a 2.3% rise in the first quarter and 7.7% on the year, with the average semi now costing €305,000 in Cork (+3.4%), €132,000 in Galway (+2.1%) and €178,000 in Limerick (+0.6%).
“There has been a recovery in bank lending, which has been reflected in the purchasing end, but the accelerated figures in the Dublin market particularly, show that we are moving into a vendors’ marketplace,” said REA spokesperson Healy Hynes.
“Many private vendors are now emerging from negative equity and can afford to make the move from the starter to the second home.
“However, we need to look at these figures in relation to the market where stock levels are at their lowest nationwide since January 2007.
“Although mortgage drawdowns at 29,498, were up 12% in Q4 2016, they were actually less than they were in 1980 when the economy was in deep recession.
“At a current average price of €136,194, and an annual compound rise of 12.9%, it will be 2021 at the earliest before it becomes economic to build outside the cities.”
“In the capital, our agents report that the market is incredibly active, with limited supply putting immense upward pressure on prices.
“In Clonskeagh, REA Ed Dempsey have confirmed that the average three bed semi has gone from €445,000 last March to €535,000 this year, a rise of 20.2% in a year, and 7% in the quarter.”
The largest growth in the country in the first three months was in Kilkenny city, where average prices jumped by 15.8% from €190,000 to €220,000.
“There is a desperately poor supply on the market, which means that any property is selling quickly and strongly, with an average selling time of three weeks,” said local agent Michael Boyd of REA Boyd.
Ends

Available for interview:
Healy Hynes, REA spokesperson and auctioneer
healy@hynes.ie 087 263 2295
Media information: Darren Hughes, 086 293 7037, Darren@mediaconsult.ie



Brexit hits UK property interest in Ireland as US enquiries rise30 January 2017

The Brexit vote, and the subsequent fall in the value of sterling, caused a 32% drop in the amount of property enquiries from the UK over the past year, a national estate agents' survey has found.

Almost 20% of overseas enquiries about Irish property are now coming from the United States, from a negligible base two years ago, according to the Real Estate Alliance nationwide survey.

“Property buyers from the US are increasingly securing homes and investment properties in Ireland, buoyed by a strong dollar and the lure of a resurgent economy for emigrants,” said REA chairman Eamonn Spratt.

Real Estate Alliance are offering Irish property vendors the chance to take advantage of this mini-boom by registering for the Alliance’s upcoming Irish Property Exhibition in Boston.

“The average house price in the US in November 2016 was $365,200 (€341,739), compared to our Average House Price survey national value of $216,856 (€202,926), so there is obvious value for American buyers in Ireland,” said Mr Spratt.

“Our agents report that enquiries from the UK have dipped by a third since the Brexit vote, and the attendant fall in the value of sterling against the Euro.

“But while the UK still forms 37% of our overseas business, 19.6% is coming from the US, 18% from Australia, 15% from mainland Europe and 11% from other locations – especially Canada.

“78% of our members report an increase in enquiries from overseas in the last year, with the average agent seeing a 22% rise in calls from outside Ireland.

“The biggest rises were seen in calls from Irish emigrants planning to return from Australia, which increased from 11% in 2015 to 18% in 2016.

“The resurgent economy is having a positive effect on the market with the number of overseas buyers enquiring about moving to live and work in Ireland rising by 9% over the past year.”

Overseas calls now make up 18% of all enquiries across the REA group.

REA agents report a rise in sales instructions from Europe, consisting of a mix of Irish emigrants and holiday home owners who feel that they are now out of negative equity situations.

The survey showed that 29% of overseas buyers are purchasing a home for their retirement and 16% are purchasing as an investment, down from 20% in 2015.

40% of sales to overseas purchasers are now for properties valued above €200,000 – a rise of 9% on the 2015 figure.

“While the market between €150,000 to €200,000 is static at 16%, the biggest change in the market has been the drop of 25% in sales of properties below €100,000,” said Mr Spratt.

“This reflects the decline in stocks of excess housing for under six figures in rural counties, and was mirrored in our recent average house price survey which saw huge percentage rises in counties such as Longford and Roscommon off a very low base.”

The first group to pioneer Irish sales in the US, REA are bringing thousands of properties to Boston, giving a host of US buyers the chance to browse in comfort and talk to the experts on the ground.

The exhibition takes place in the Lenox Hotel, Boston from 5-8pm on March 23.

“Last year we brought the first Irish property exhibition to the US and met with 425 potential buyers in New York.

“32% of the attendees were Irish families looking to return home, 19% were retirees looking to downsize, and 17% were young Irish people returning to work.

“5% of attendees were searching for a holiday home and another 3% were keen to buy a second home with ties to family in Ireland.

“A survey of attendees also found that 16% were investors while 8% were US-based people who have homes in Ireland and were looking for them to be either sold or managed.”

Real Estate Alliance (REA) is Ireland’s leading property group of Chartered Surveyors with over 55 branches nationwide, comprising many of the country’s longest-established auctioneers and estate agents.

Further details on the REA Boston Property Exhibition, and a list of local agents, can be found on www.realestatealliance.ie/Boston or send an email to register for the event at info@rea.ie.

Available for interview:

Eamonn Spratt, REA Chairman 086 2531277 eamonn@reaspratt.ie or via Eimer O’Keefe 086 824 9040 eimer@rea.ie

Other media enquiries:
Darren Hughes, MediaConsult, darren@mediaconsult.ie, 086 293 7037

Ask the experts: How do you see the Irish residential market behaving in 2017?23 January 2017


Eamonn Spratt, Chairman, Real Estate Alliance

1. How do you see the Irish residential market behaving this year? (2017)
Our agents nationwide estimate 6% growth in 2017, off the back of an 8.4% increase last year – however, there is a lower level of expectation in the commuter counties at 3.8%.
We have already noticed a tailing off of receiver/bank/fund sales and a marked increase in first-time buyers at viewings in the latter weeks of Q4, setting the trend for 2017.
A lack of supply is continuing to push prices upwards, which is bringing builders back into the market.
2. In what locations do you expect to see most capital value growth?

Stronger price centres such as Dublin and Cork city will see most growth, due to the easing of the Central Bank mortgage lending restrictions.

Our agents in Dublin are predicting a 6.8% rise in 2017 and we are already seeing the positive effects of first-time buyers returning to viewings.

While expectations in the commuter areas are lower at 3.8%, a complete scarcity of suitable supply in the rest of the country is expected to fuel increases of 7.3 in our larger rural towns nationwide.

3. Are prices static or falling in any locations that you can think of?

Prices were static in commuter towns such as Ashbourne, Blessington, Naas, Maynooth and Celbridge in Q4, with low growth figures in 2016.

4. Where do you see rents going in 2017?

Rents will continue to rise until supply improves. Until building starts, this issue won’t be dealt with. In Dublin, new stock is under construction and now that first time buyers are re-entering the market, there may be a little easing.

However, the introduction of rent controls in the capital may see many landlords look at exiting the market, reducing the amount of available stock.

5. What impact (if any) do you think the combined effects of last Budget’s Help To Buy scheme combined with the Central Bank’s end of year tweaks to its lending regime will have on the market?
The combination of these measures has already given an injection in to the market with first-time buyers suddenly in evidence at viewings in the capital in November.

The moves have given the younger generation a foot on the ladder to buy a family home.

6. What are your views on Rebuilding Ireland, Minister Coveney’s plan to sort out the housing crisis?

The State needs to fast track the supply of affordable homes to address the void of local authority construction over the last decade.

The Minister seems to be passionate about the task in hand, but the proof will be in the building.


7. What steps would you urge the Government to take in 2017 to help solve the housing crisis?
Until the procurement process is speeded up and the provision of services to zoned lands are enhanced, this vehicle won’t get out of second gear.

We have zoned lands, developers are ready to build, but nationally they are finding that they can’t get the required services in due to a multiplicity of agencies such as Irish Water.

Local authorities also need to be realistic and introduce a phasing of upfront monies to include development fees and contributions.

Local authorities have also changed the format of the bond that they are now accepting, looking for payments upfront whereas previously an insurance bond would suffice.

8. How do you see the supply situation at the moment? Where do you think it will go in 2017?

Development financing is the key to solving the housing supply shortage as home building becomes potentially profitable again for builders.

The majority of new housing is set to be delivered outside the Greater Dublin and commuter area where the issue now is financing to fund construction – especially in areas where the house price is substantially under €200,000 but a need for housing exists.

The State can impact housing supply by introducing a phased payment structure for developers to including development fees and contributions.


9. In your experience, what percentage of buyers are paying cash? Do you think this will rise or fall this year?

Our REA Average House Price Survey for Q4 shows that 31% of purchasers are cash buyers, a drop of 16% on the December 2015 figure of 37%.

The highest percentage of cash buyers are in the rural towns outside the commuter areas, where the figure stands at 38%, down from 44% this time last year.

In Dublin city, we have seen a large increase in mortgage-funded purchases over the past year, with just 22% cash buyers in Q4.

10. What would you buy if you were an investor spending (a) €250,000, (b) €350,000 and (c) €600,000. (specificially to a property type and a specific area address egs: three bed semi in Chapelizod/ two bed apart in Portlaoise etc) and why?
(a) Spending €250,000 – Three bed semi in Tallaght area achieving €1,600pm
(b) Spending €350,000 – Three bed semi in Firhouse / Knocklyon area achieving €1,850 - €1,950pm
(c) Spending €600,000 – Four apartments in north Dublin that yield 10% per annum and will appreciate in value.

11. In your view how is the supply side of the residential property market sitting at the moment?
Supply is extremely low – as an example, there are only 62 properties for sale in the Tallaght area at the moment.
There is a big under supply of suitable properties for people to downsize to, such as bungalows in towns, and also very few 4 or 5 bed detached in the stronger rural towns for families.
12. If supply is at a record low right now why aren’t enough people selling?

The lack of suitable supply to trade up to is an issue throughout the market not just at the lower, new or first-time end.

While the Central Bank mortgage restrictions have been eased for first-time buyers, second time buyers still cannot afford to save the massive deposits needed to make the step-up from a 225,000 home to a 400,000 home – thus keeping supply low at the starter end.



13. Is it a good time to be a first-time buyer? State why?
Yes. We are seeing evidence of a sudden return of the first-time buyer to viewings, especially in the Dublin area, since the lifting of the Central Bank restrictions.

The 16% annual fall in cash buyers points to a willingness of banks to lend again and compete for business.

However, the choice is limited and there are little to no new schemes available, especially outside Dublin.

14. Is it a good time to trade down? State why?

If the rate of growth is consistent across the market, you have more to gain on the larger asset, and they may inform your decision.

If I own a house worth €1m, and growth is forecast at 5%, then I stand to gain €50,000 in value over the year. If I am moving down to a €300,000 house it will appreciate by €15,000 – the difference is €35,000.

For older couples downsizing, there is a lack of suitable smaller accommodation nationwide.

15. Is it a good time to trade up? State why?
Yes. There should be strong interest in what you have to sell. The average house price rose by 8.4% last year and recent announcements have been positive for the market.

Also, the value differential between a three-bed semi or similar and four-bed detached either in an estate or the country is now much less than any time since the 90s.

Assuming that you can get the finance, it is a good time to sell.

16. In your view, will there be enough new homes to meet demand in 2017?

It is difficult to see the construction sector meeting the significant demand in the stronger centres in 2017.


17. Is there a danger of another property bubble forming as some are claiming? Explain

That fear always exists in a cyclical property market. At the moment, the restrictive nature of deposit limits for second-time buyers and very short mortgage approval time limits are serving to keep a rein on the market.

For a market to overheat you would need much more freely-available credit. This is not the case at the moment.

Not many people are purchasing for a quick return – they are either owner occupier-led or investors looking at yields over a five to ten-year play.


18. In your view, how can we best facilitate the roll out of new homes required to solve the crisis?

We need available and affordable development finance, the provision of serviced zoned land and a realistic expectation from local authorities around associated development costs such as  phased payments for development fees and contributions.

19. In your view, what particular challenges are buyers facing in regional towns?
The main issue is a limited supply of suitable four bed homes which provide an opportunity for the starter home family to trade up.

A higher percentage of cash buyers, who are outbidding young mortgage buyers, are able to purchase and complete as they can bypass many of the time factors associated with the modern mortgage process.


20. Do you believe developers when they say building is not taking place because the cost of building is still too high relative to what people will pay? What is your view here

The cost to build to date versus the selling price of the new home has been a genuine prohibitive factor for developers, especially in areas where the average house price is less than €200,000.


Opinion Piece: Eamonn Spratt - Chairman of REA09 January 2017

What a difference a year makes, with property agents around the country all predicting rises for 2017 that would indicate a return to a functioning market.
But while a national average increase of 6.1pc seems healthy and consistent, and in no way indicating a bubble, we could be facing a vastly different situation in 12 months' time if the current supply does not change.

The Irish Independent Real Estate Alliance survey shows optimism in the market, with the return of first-time buyers to viewings, thanks to the easing of the Central Bank deposit restriction and the Government's Help to Buy scheme. However, they will compete with people trading down for a limited supply of mostly second-hand stock, unless the Government instigates Help to Build measures for developers.
New home building will not take place unless the barriers are lifted, which at the moment are preventing developers from entering the market. Developers will have to be encouraged to build in areas where it is not yet viable, but demand exists - and the State has to intervene to allow that to happen.

For the first time in eight years, our members are seeing builders looking for suitable development land. Our members have received feedback that developers are finding construction finance difficult to procure.

Nama chairman Frank Daly recently confirmed it may fund 20,000 residential units by the end of 2020, subject to commercial viability. About 78pc will be delivered in Dublin, and 15pc in commuter counties such as Kildare, Wicklow and Meath - and it will be profitable for builders to construct in these areas, with selling prices in excess of the building cost of €200,000. However, just 7pc of housing will be delivered outside the Greater Dublin area, where the issue now is financing to fund construction - especially in areas where the house price is substantially under that break-even level.

Our agents in Cork and Galway cities have noted a lack of new developments coming on-stream, which should be a warning for the rest of the country. House building in 2017 will not just be about the price that can be obtained - the path to breaking ground must be cleared for development to take place. Until the procurement process is speeded up and the provision of services to zoned lands enhanced, this vehicle won't get out of second gear. There are several factors at play.

In areas where it is profitable to build, we have zoned lands, and developers can't get the required services due to having to deal with multiple agencies.

Some local authorities are looking for payments upfront whereas previously, an insurance bond would suffice. Councils also need to introduce a phasing of upfront monies to include development fees and contributions. Concerted action can be taken in these areas to address a supply issue which is approaching critical in some places - for example, there are only 62 properties for sale in the Tallaght area at the moment.

The market has also seen an increase in people downsizing. However, we need a supply of people trading upwards, which is where the Central Bank's deposit restrictions and multiplier limits have hit the second-time buyer. The person who wishes to trade up and leave the smaller home which the downsizer now wants, is finding it difficult to secure the finance to do so.

Eamonn Spratt is chairman of the Real Estate Alliance

REA House Price Predictions 201709 January 2017

First-time buyers, encouraged by the easing of the Central Bank’s restrictions on mortgage deposit lending, will drive a continued rise in house prices throughout 2017, estate agents have predicted.

A survey carried out for the Irish Independent by the Real Estate Alliance Group has found that agents throughout the country expect prices to rise by 6.1% on average in 2017.

And after a bumpy year for the Dublin market, agents in the capital are predicting that house price rises will outstrip the national average and grow by 6.8% over the next 12 months.

Rising rents, a lack of suitable supply and the punitive mortgage deposit rules for first and second time buyers had combined to put the Dublin property market into reverse throughout the opening months of 2016.

However, an increase in mortgage-approved buyers and the recent easing of the Central Bank’s deposit restrictions has seen first-time buyers return to viewings.

This, combined with a shortage of suitable supply, has caused prices to appreciate, and REA agents in the capital are predicting that the outlook is bright for the new year, at least in the lower end of the market.

However, there is less appreciation anticipated in the upper ends of the family home scale as serious issues around the income multiplier and the deposit rates put the brakes on many second-time buyers trading up.

Agents in the three main cities outside Dublin are optimistic about 2017, with rises of 10% predicted in Limerick and Galway, with Cork looking at a more modest 5% increase with agents in the latter two areas highlighting a lack of new developments planned for the cities.

The outlook for the commuter areas surrounding the capital is quite cautious, with counties around Dublin predicting a rise of 3.8% on average and many agents fearing that the market has hit its height under the current financial regime.

Agents in Meath are predicting just a 1.8% change next year, with some areas such as Navan and Kells forecasting that there will be no movement in the coming 12 months, thanks to a lack of new development and a shortage of suitable supply.

There was minimal growth in the final quarter of 2016 in Wicklow, however, agents are confident that the market will react positively to a series of significant upcoming new developments adjacent to the N11 including Kilcoole, Rathnew, Arklow and Wicklow Town.

Prices in Kildare were stagnant in the REA’s Q4 Average House Price Survey, and REA are predicting that the Government’s Help To Buy Scheme and the easing of the Central Bank restrictions will combine to produce a 3.5% increase in the coming year.

“The easing of the Central Bank restrictions has given the market great short-term hope, but the real problem in the property lies in supply,” said REA chairman Eamonn Spratt.

“We are bringing people into the market, but we have no long-term plan to provide the suitable housing that they need around the country.

“The fact remains that builders will not create developments unless those properties can be sold for more than €200,000.

“Until that point, unless there is state intervention on supply financing, we will not see sustainable building in areas where the average is below that point.

“It is this realisation that is causing price inflation in towns around the country, with the highest rises of all – an average of 7.4% – being predicted for the sector outside of Dublin, the commuter areas and the major cities.

“Longford, for example, grew by 41% in 2016 and prices are predicted to rise by a further 15% this year.

“However, the price of the average house in Longford town is just €78,000 and will reach €90,000 by the end of 2017 simply because the oversupply on the market has now sold and there are no new developments on the horizon.

“Double digit rises of 10% are also being predicted for the same reason in Roscommon, Monaghan, Cavan, Galway County and Kilkenny.”

The lack of building opportunity could hurt future economic development in lower-priced counties, as the example of Carrick-Shannon in Leitrim shows.

Local agents report that employment is growing in the town and that there will be a shortage of suitable properties through till 2018 at the earliest, with lack of supply predicted to drive a 10% rise in the coming year.

“The average house price is €122,000 and unless houses can sell for €180,000, builders will not make money and start building,” said Joe Brady of REA Brady.

In some areas of the commuter belt, those trading down are now in competition with first-time buyers such as In Ashbourne (+2%) and Drogheda, which is predicting a 7% rise.



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REA Q4 Average House Price Survey26 December 2016

The price of an average house in Dublin rose by 4.2% in the final quarter of the year as first-time buyers returned to viewings in the capital.
The average three-bed semi-detached in Dublin city now costs €389,167, a rise of €15,834 (4.2%) in the last three months and an increase of 8.9% over the past year, the Q4 REA Average House Price Index has found.
The announcement of the upcoming easing of the Central Bank lending restrictions on first-time buyers has had an immediate effect in Dublin, with hopeful buyers suddenly back in evidence at house viewings.
And the survey found it took just five weeks to sell the average house in Dublin City in Q4, a drop of two weeks from Q3.

The REA Average House Price Survey concentrates on the sale price of Ireland's typical stock home, the three-bed semi, giving an up-to-date picture of the property market in towns and cities countrywide to the end of the selling season in December.

There were substantial rises in both South County Dublin (€406,667 up 2.5%) and North County Dublin (€267,500 up 2.9%) as the capital’s property market, which had been falling this time last year, finished with an 8.1% overall annual increase.
However, while the easing of the restriction on first-time buyers deposits has had an impact in the capital, the commuter market experienced a rise of just 1% in Q4 with prices static in commuter towns such as Ashbourne, Blessington, Naas, Maynooth and Celbridge.

And the major cities such as Cork, Limerick and Galway followed much the same pattern in Q4, returning an increase of 1.1% over the last three months, with prices static in Cork City at €295,000 – a rise of just €10,000 (3.5%) on the December 2015 figure.

The average semi-detached house nationally now costs €202,926, the Q4 REA Average House Price Survey has found – a rise of 1.4% on the Q3 figure of €200,148.
The biggest percentage increases over the past year came in the country’s smaller rural towns situated outside of Dublin, the commuter belt and the major cities.
Prices here rose by an average of 12.3% over the year, with a three-bed semi now costing €134,290 – an increase of 2.4% in the past three months.

While the easing of the Central Bank deposit restrictions has had a positive effect on the market, the lack of suitable supply is the biggest influence nationwide, according to REA Chairman Eamonn Spratt.
“In many lower-priced towns, a previous oversupply has now worked its way out of the market, and buyers are realising that there will be no new developments as it is still uneconomical for builders to start new-builds,” said Mr Spratt.
“For that reason Longford, which is the most affordable county in the country, has seen its three-bed semi price rise by a massive 41.8% over the past 12 months – going from €55,000 last December to its present price of €78,000.

“Similarly, investors in property in Roscommon would have seen their values rise by 28.6% over the past year, with agents reporting that Q4 rises of 8% in Roscommon town are fuelled by buyers realising that there will be no further building in the area in the short term.”
After seeing the biggest growth in the country over the past few years, counties in the commuter belt have seen their progress slow or stagnate over the past three months with Meath (1%), Kildare (0%) and Wicklow (0.8%) all starkly contrasting with the growth in the Dublin market.
“Our agents are reporting that the income multiplier restrictions are having the greatest effect in commuter counties, and couples earning €60,000, for example, cannot now afford to purchase suitable homes due to lack of supply,” said Eamonn Spratt.
“There is a cap with the multiplier of 3.5 times income beyond which many couples cannot go, and while there is plenty of activity, in some commuter towns prices are probably as high as they can go under the current regulations.
“However, some of those same commuter towns nearer Dublin are beginning to see new builds commencing which shows that developers are confident that if they build units, they will sell above the profitability cut-off floor of around €200,000.”
The average time taken to buy a house dropped from six to five weeks in Q4, with both Dublin city and county and the country’s large regional towns experiencing shorter sale times.
There was also an increase of mortgage-financed buyers nationwide with cash buyers making up just 32% of sales around the country – down from 40% at the end of 2015.
In Dublin, just 25% of sales are now to cash buyers, while the figure in the commuter counties is lower again at 21%.
Barry McDonald of REA McDonald in Lucan thinks it will be the New Year before we see the full impact of the lifting of the Central Bank restrictions and the Government’s Help To Buy scheme.
“First-time buyers are definitely the main cohort out in the market in Dublin – most obviously in the €250,000 to €300,000 price bracket which is moving very well,” he said.
“However, as you move up the price range to the €400,000-plus market, buyers are thinner on the ground.
“This is a side-effect of the continued 20% deposit restrictions placed upon second-time buyers, who cannot afford to trade up in the market, thus freeing up suitable starter homes.

“We are also seeing vendors thinking that they may do better in the new year and holding off before coming to market.
‘The market is very definitely being driven by supply and not demand. The typical scenario now is that there are between one and three bidders for a property rather than five or more and buyers are finding that if they miss out, there is not necessarily an equivalent property out there.”

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Media information: Darren Hughes, MediaConsult, darren@mediaconsult.ie, 086 293 7037
Available for interview: Eamonn Spratt, Chairman REA, 086 253 1277





Finance for residential development key to solving supply shortage: REA23 November 2016


Available finance for residential development is the key to solving the housing supply shortage as home-building becomes potentially profitable, according to national estate agency group Real Estate Alliance.

Real Estate Alliance (REA) members are reporting a marked increase in sales activity across the country and not just in the major cities but also in provincial towns, the group’s AGM heard last week.

While Dublin and the commuter areas are starting to recover from the stagnation caused by the Central Bank’s mortgage deposit restrictions, the biggest rise in activity is being seen in Ireland’s smaller urban towns where the deposit requirement is not as significant.

REA is Ireland’s leading property group of Chartered Surveyors with over 55 branches nationwide, comprising many of the country’s longest-established auctioneers and estate agents.

Eamonn Spratt of REA Spratt in Dungarvan was appointed chairman during REA’s AGM in Dungarvan last week where Frank Daly, chairman of NAMA, addressed the meeting on the future direction of NAMA and the current housing supply shortage.

“Throughout the country, our agents are seeing a definite rise in enquiries, with demand increasing further in quarter four,” said REA Chairman Eamonn Spratt.

“Our REA Average House Price survey saw the average three-bed semi rise above €200,000 in our Quarter Three survey – this level of return is now providing a catalyst to get dormant developers returning to the market with much-needed supply.

“Time taken to sell has reduced by two weeks to five weeks in country areas in the three months to the end of September and our agents are reporting a definite increase in mortgage approvals.

“The Central Bank mortgage deposit rules did not hit the country market as hard as the larger cities as the amount of the deposit required is less.

“For the first time in eight years, the majority of our offices are seeing builders looking for development land across Ireland.

“As well as available finance having a major impact on housing supply, a second hurdle is the provision of serviced land.

“Although buyers are now more plentiful on the ground, the problem of supply remains.

“Interestingly, our agents are now reporting that development land is returning to the market for sale, with builders showing much greater appreciation for the modern buyer's needs.

“REA agents are actively engaging with developers to advise as the requirements of new home buyers.

“We welcome the latest announcement by The Minister for Housing, Planning, Community and Local Government to fast-track the delivery of 30,000 new homes in urban centres across the country.

“In particular we are in favour of the fast-tracking of residential housing schemes and the identification of significant land holdings for potential development.

“Overall, we expect that the market outside Dublin will appreciate by circa 10% over the next year – greatly influenced by the lack of supply.


Message from our Chairman

Eamonn Spratt Eamonn Spratt - Chairman
Real Estate Alliance

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