Originally published in the Metro Herald, 29th March 2012
Confusion Reigns for Dublin Buyers
– Carol Tallon
This week brings with it more bad news for the beleaguered property market as the Central Statistics Office, or CSO, releases its residential property price indices for February.
Last month recorded the 53rd consecutive month of decline for the Irish market. While the pace of decline is increasing nationally month on month, in Dublin, the pace of decline so far this year has actually slowed from 4% in January to 1.2% in February. This applies to all residential properties in Dublin, when this figure is broken down further, it becomes clear that last month, houses in the capital saw a drop of 0.7%, the lowest of any category. This means that Dublin houses have statistically lost a further 20.2% of their value in the last 12 months, a total drop from peak prices of 56%.
On the other hand, apartments continue to suffer, with recorded drops of 22.9% over the past 12 months. This means that apartments, having suffered to the most severe losses in the residential market, are now selling at 62% below peak prices. It exceeds forecasts from many commentators, including Davys, who forecast a total peak to trough decline of 55-60%. This feeds into the argument of over-correction, which most property buyers would reject.
In the continuing absence of a national property price register, the CSO, while imperfect at capturing data, is the best source we have for valuing mortgage-based transactions. It is worth noting that it does not record cash purchases, which are anecdotally accounting for 25-35% of current activity or up to 75% of bank auction sales.
In short, the CSO indices do not present a full picture of the housing market. While it is still expected that the national property price register will be fully operational by the summer, house-hunters will have a battle on their hands when it comes to accessing and interpreting the information.
The latest figures while do little to help buyers as they go about their search. For instance, since January, the South County Dublin suburbs of Rathfarmhan, Dundrum and Stillorgan have experienced similar sales activity in a single quarter as they did in the year previously. This has decimated the supply of housing stock, family homes in particular, and despite economic indicators to the contrary, buyer confidence in the value of those areas has returned. This inevitably means that prices will remain steady and possibly increase in line with increasing demand and decreasing supply.
The opposite is true in many of the west Dublin suburbs, namely Tallaght, Clondalkin and west of Blanchardstown where over-supply and relatively low demand remains a real problem.
Demand remains steady for well-established, family neighbourhoods in north Dublin City and County with quality family homes in short-supply. This has resulted in sellers holding tough on asking prices and it remains to be seen if buyers will pay the asking prices or wait.
In the course of house-hunting with buyers over the past week, we have seen great opportunities in North County Dublin, particularly in the Malahide, Rush and Skerries areas. Demand here has not been as great as we have seen in the city suburbs, despite easy Dart access to the city centre. In such areas of relatively low demand, there is a great opportunity for buyers to negotiate significant discounts from the asking prices.
Irrespective of CSO figures or individual property asking prices, house-hunters are reminded that the circumstances of the sellers will dictate the price that they are willing to accept for their property. For that reason, buyers are advised to be a little more careful in their research and selection of properties for viewing. It is always wise to find out about the seller prior to viewing the property. If sellers make access to the property for viewing difficult, it is generally an indication that they are not ‘motivated’. It is also important to realise that a seller who is anxious to seller may be motivated by reasons other than financial. For example, a prompt closing might be more desirable to particular sellers than an extra €5,000. In such an instance, the cash bid or the promise of early closing will usually win over competing bids, despite the fact that the competing bid may be higher. If buyers fail to ask questions of the seller, they will never find out this information. Knowledge is said to be power, however, when it comes to an uncertain property market, information is power. Buyers must arm themselves with as much information about their chosen area, their target property and the sellers circumstances as possible in order to secure a good deal. If they do this, confusion of CSO or other statistical data will not distort their search.
Carol Tallon is Author of the Irish Property Buyers Handbook 2012/2013 and Managing Director of Buyers Broker Ltd., www.buyersbroker.ie Tel: 01 4428 035 or email: firstname.lastname@example.org.