By Carol Tallon
Originally published in the Evening Herald, Friday 7 September 2012
UK auction giants Allsop announced their largest auction of distressed Irish property this week. It will see 127 homes and investment properties go under the hammer next month and it raises the question for would-be buyers, is now really the right time to buy?
For home buyers, it is not enough to look at their local market; they must firstly look at their personal circumstances. Are they ready to commit to a mortgage, which for many first-time buyers will involve a huge lifestyle change. It is not as simple as working out the cash difference between monthly rent payments versus monthly mortgage repayments and having the 10 per cent deposit. It usually means swapping their easy access to work and social life that a city centre apartment offers, in favour of a three bed semi in suburbia. For many, buying their first home means committing to their current partner in a way that is every bit as binding, both legally and financially, as marriage (without the relationship security). It also means committing to their current job for the foreseeable future and even committing to Ireland, which is increasingly a decision that young Irish workers have to make.
If now is the right time for the buyer personally to take the leap from renting to buying, then certainly the Dublin market is ready and has been for the last 9 – 12 months. According to the latest round of daft.ie and myhome.ie reports, there is 45 per cent less housing stock, not apartments, available in Ireland today compared to September 2011. This tells us those first-time buyers, who have been active in the market since mid 2011, are by-passing apartments as starter homes and are buying up houses. While apartments have fluctuated in prices over the last year, house prices have held steady and house-hunters will have noticed the gap between the asking price of a house and its eventual sale price narrow. Three to four bedroom family homes in sought after areas of Dublin are now sale agreeing within weeks of coming to the market. Estate agents around the capital are finding their open viewing well attended and it is not unusual for houses to attract 40 viewers and early offers in the first week. Apartments are continuing to lag behind in terms of both sales activity and price.
This would suggest that the bargains are drying up and looking at property sales websites, buyers would be forgiven for thinking that; however, Nama and non-bank Nama banks continue to hold huge levels of housing stock that is available for purchase but not brought to the open market. There are a few reasons for this, firstly, it is in no one’s interest to flood the market and depress the recovering market, secondly, no bank has the resources to bring all available properties to the market at once and lastly, the bank are continuing to add to the stock weekly.
For house-hunters looking for a bargain, they will be surprised to find that that Nama is not a motivated seller. Mortgage companies looking to leave the Irish market will offer greater opportunities for ready buyers.
Speaking to buyers, there is no doubt that the mortgage interest reliefs, which are available in full until the end of this year, are a big factor in buying now. On a typical family home, the relief over the next seven years may be worth approximately €30,000. The impending property tax does not appear to put buyers off; in fact, most buyers have been expecting this and see it as a natural consequence of the reduced stamp duty. The biggest deterrents to buyers over recent years have been restricted access to credit and lack of transparency in the market. With the introduction of the national property price register excepted shortly, would –be home buyers are feeling more confident that now is the right time to buy.
Carol Tallon is author of the Irish Property Buyers’ Handbook annuals 2011-2013 and Managing Director of Buyers Broker Ltd. Tel: +353 1 4428 035 Email: firstname.lastname@example.org