This week has been an interesting one. We see the shortage of family homes in Dublin suburbs, typically three bed semi-detached houses, continue to dominate the property market chat. Once again, the balance of power appears to be slipping back to the seller – but only in areas of under-supply and consistent demand. At the moment, our office is seeing an increase in buyer demand for negotiation-only services. This tells us that estate agents have done little over the last few years to improve how they deal with buyers. Yes, they work for the seller, however, the buyer should have a right to fair and honest information, something that is crucially lacking from the Irish market. Would it be a huge undertaking to introduce a transparent system of bidding and offer reporting/recording?Nationwide, we are seeing pockets of the country enter into recovery phase and this is happening much sooner than we expected and much sooner than property statistics would have us believe. There is a simple reason for this; statistics take into consideration the almost ready, half-finished, poorly-constructed and entirely undesirable ‘units’, be they houses or apartments, in areas nationwide where buyers do not want to live. Buyers discount such properties immediately, almost instinctively, but statistics cannot. When house-hunting or bargain shopping right across the country for buyers and investors, we can see that national and even regional statistics do not tell the full story. For example, for a recent search in Carlow, we found that eight of the 17 potentially interesting, open market, properties had sale agreed – two had sale agreed just that week! Every estate agent told the same story, that is, decent properties priced to sell were finding a ready buyer. What this means for would-be buyers, is that while prices are not increasing, the very best stock is moving first so the same price will be paid next month for a slightly inferior property.
Carlow is not the only area to experience this. Galway was second only to Dublin for signs of recovery. Now, the shortage of Galway houses, both for home-buyers and investors, has lead to a palpable increase in residential auctions. Invariably, these houses achieve in excess of the AMV or their stated guide price, under the hammer. Instructions to this office from Galway tend to be for off-market properties as the current stock levels are virtually non-existent in certain suburban neighbourhoods. Interestingly, Nama and non-Nama banks continue to hold high levels of residential stock in and around Galway, maybe now is the time to think about releasing some.
Despite the adage, a rising tide does not lift all boats and this is evident in Mayo, where stock does not appear to be moving at all. The only sales reported are for those properties new to the market. If a property has been on the market in excess of three months, there appears to be little prospect of a sale and reducing the price does not help. One buyer I spoke to there explained that he had sale agreed his existing home to an overseas buyer, but that the sale was not due to close until after the summer. When I queried this, he explained that these were the only buyers interested and they had signed contracts at a ‘good price’, which I took to mean in excess of current market value. This could not happen in Galway or in Dublin but I could understand the logic, based upon local conditions. Effectively, this man must wait until his sale closes before he starts house-hunting, in reality, the houses available today are likely to be the same that he will be looking at in three or four months time.
In terms of financing, the trend of cash buyers continues and this includes first-time buyers; however, this appears to be a conscious choice for many. Property is looking like a safer pit to sink cash into than any bank. What has definitely changed in the last quarter, is the ease by which investors can access credit, the banks are certainly open to quality proposals.
In one instance, a couple in the midlands described to me how their local branch manager contacted them, by phone, and asked if they were interested in a second mortgage for the purpose of buying an investment property in Dublin. This particular couple were offered between 60 per cent to 75 per cent loan to value. This is wholly inconsistent with the continuing bleating about lack of credit for Irish property. In fact, we are seeing a genuinely increased appetite for property lending across most of the banks still functioning in the Irish market. Having said that, there is no doubt that the banks are ‘cherry-picking’ their applicants, only the best need apply.
Carol Tallon is author of the Irish Property Buyers Handbook 2012/2013 and MD of www.buyersbroker.ie