What exactly do property buyers want in 2010? Developers did not know, town and city planners nationwide clearly did not know and sellers do not want to know. However, at a recent Home Buyers Seminar in Dublin, property buyers turned out in force to answer this question and raise many others. The event was hosted by Buyers Broker Ltd, a body representing property buyers in Ireland, with the dual purpose of educating buyers about the current market and allowing buyers to educate the market in return.
Throughout the course of event, before and after, approximately 80 buyers in the Dublin area were addressed and challenged to share their house-hunting experiences. The majority of those were finance-ready, first-time buyers with budgets ranging from €160,000 to €450,000. Of the 80 questioned, one single buyer was seeking an apartment as a lifestyle choice, the other approx 79 were expecting to secure a house within their chosen areas, all within the M50 environs. Whether it is cultural, historical, financial or otherwise, feedback from buyers is telling us in no uncertain terms that they do not want apartments as a first preference.
Information is plentiful but accurate, quality data on the Irish housing market is difficult to come by. Most opinion polls are from estate agents and property commentators but little is gathered from prospective home buyers, their views are rarely represented in the host of surveys commissioned, despite the fact that it is buyers who are tentatively leading the market, following a stand-off in 2008 and early 2009. They are doing this by adopting the simple premise of demanding value. Negative equity is foremost in their minds as they hunt, future-proofing is essential. Capital appreciation can no longer be assumed and therefore, most be acquired and the best way to do this is buy below market value.
The big question of the day for buyers was simply “Is now a good time to buy?” or more specifically, “has the market ‘bottomed-out’ yet?”. For some buyers, in uncertain careers or for any number of personal reasons, now may not be the time to buy. Particularly if they are house-hunting in an area that has yet to level out, for example, Kilkenny City, Cork City or parts of Dublin 15. For those buyers who are approaching a stage in their lives when they wish to put down roots, perhaps they are getting married or are considering starting a family or simply wish to own their own home, it may well be the right time for them. Home ownership and the timing of same is personal decision and should be made on an individual basis, having regard to the financial position of the buyer but not using it as a sole factor.
The question of whether the market has levelled-out is a more objective one, based on facts, and can only be answered in the context of local market performance. This leveling off will not come in a straight line across the board, the market is far more unruly than that. Tentative signs of recovery were evident in Galway City, parts of Waterford City, Dublin City Centre and South County Dublin in the third quarter of 2009. This was well confirmed by the first quarter of 2010 and the trend continues despite earlier fears of a double dip in the local market. In general terms, it can be expected that areas of high demand and low supply will recover first, without ever hitting the magic 50% discount level as we have seen in parts of Galway City and South County Dublin. Buyers need to understand that much-hyped figure of 50% as the guideline price decrease is not universal. It is a statistical average and it is distorting buyers’ view of the local markets. For example, apartments in rural towns will face a hit in real terms of somewhere in the region of 65%+ but starter houses in areas of high demand and low supply for example, parts of Blackrock, Terenure, Ranelagh saw a drop of less than 30% in some cases. Buyers in these areas were waiting for the 50% drop that never came. They are now seeing properties sale agree within a shortened time period (currently 6-8 weeks) and supply further decrease.
This clearly demonstrates how statistics may be useful to commentators but they are entirely misleading for individual buyers in the course of their search. As instruments for determining value, they are simply not fine enough. When it comes to valuing property, the rules may have changed but the game remains. Value is objectively determined by supply and demand. Areas of over-supply can be readily identified so the industry challenge is to accurately pinpoint areas of demand. This is where buyer contribution and interaction becomes crucial.
Today’s buyers are well-researched and determined to learn from the mistakes of the past. The key for buying well in the current market is to assess the financial proposition like an investor but shop for a ‘home’, forget the term ‘starter-home’. This means buying the house that can evolve with the needs of family, one that offers a social life, access to schools, sporting activities and a restaurant within easy access.