A snapshot of the Irish housing market will tell you that residential prices are starting to rise and statistics for that rise range from less than 1 percent to upwards of 12 percent.  That is already a wide range, even for average figures, but what if I was to tell you that the realities of the market are much more dramatic?  For example, bidding on a period house in Sandymount, Dublin 4 this summer started at €550,000 and finished much closer to €800,000.  And this was not an isolated event.  Conversely, a stunning split-level bungalow brought to the market in Wexford close to €450,000, eventually sold for €285,000.  In both instances, for good and for bad, the rate of increase or decrease was well in excess of 12 percent and herein lies the problem with releasing raw data to the market.  When grouped together and averaged out across the country, these figures fail to tell us the true story of any particular area.  The value of this raw data is its application in local areas and, for this, the National Property Price Register is the most reliable source.

This is far more straightforward for the Dublin market, where the volume of transactions allow would-be home-buyers to make comparisons of similar properties, recently sold, to reach upon a valuation;  however, this simply not the case in many regional cities and particularly for rural areas.  For most locations outside the Capital, the statistics hinder rather than help the valuation process.

Looking at family homes, approximately 2,200 sq ft in size and each on a half acre site across Dublin, Wexford and Cavan we can see that the average prices for the same properties in the different counties are €1.85 million, €340,000 and €125,000 respectively.   This variance not reflected in our national reports.  In fact, since 2011, when slight positive movement started to creep back into the Dublin market, we have seen the gap between urban and rural housing widen.  And I believe that it is fair to suggest it is no longer an urban/rural divide but rather a Dublin and ‘outside Dublin’ divide.  Every market move, every government initiative and every mortgage policy change in the last five years has served to widen this gap further and further.  Most recently, the changes for social welfare rent allowance boosted the rental market in Dublin and many surrounding areas, by increasing the limit of rent that can be charged.  This had, and continues to have, the effect of boosting the investment market and the residential market in general.

On the other side, almost every other town and village across the country saw the chargeable rent in this category decrease, which has the effect of pushing down all local rents, which has a negative knock-on effect for the market at large.  The most frustrating aspect of this is the term of the decrease, which is at least 18 months, by which time it is possible that a further decrease might be imposed.  This is crushing local investment markets that are already suffering due to investors nationwide choosing to invest in Dublin rather than their local areas – in most cases, a sound decision but one with unfortunate consequences for the locality.  Of course, this is not helped by the banks who are releasing housing stock in regional areas but are slow to grant mortgages to buy in the same areas.

  As in any market, with adversity comes opportunity and we saw that in Dublin two and three years ago.  Savvy investors with no need for finance, availed of genuine opportunities and have already seen their investments grow significantly as the shortage of housing persists.  But investors today will have a much tougher time trying to reconcile the high buy-in costs and dropping rental yields, sometimes as low as 4 percent, in the Capital as bargains.  Similarly, home-buyers in Dublin will have their work cut out for them.  We started talking about a shortage of family homes over the past 18 months but this shortage is reaching a critical point right now.  Arguably, construction needs to start up again, however, in my opinion, it would be far more effective to remodel the existing overhang of unsuitable properties and make them fit for family homes.  Luckily, we can see a shift in planning towards this way of thinking and Dublin City Council are running an initiative to encourage families to remain in the city rather than pushing them out to the suburbs.  It is a work in progress but one that we should welcome.

Outside of Dublin, the situation is very different.  Home-buyers outside the Capital have a great opportunity now to buy quality homes in most areas for less than the cost of construction; however, the sting in the tale is that they must be very sure about their purchase as it is unlikely to be a short-term home.   The medium-term forecast is not favourable for a quick sale if their circumstances change.

Certainly there are opportunities for investors outside of Dublin but these do not lie in every ghost housing estate.  Speculation only makes sense in those towns that have the ability to grow into their over-supply within the next decade.  Investors need to really research the numbers of vacant houses and apartments in their area and contrast that with the genuine demand for housing, without relying solely on social housing lists, which may be satisfied by the local authority’s own available housing – and the number of housing units in the possession of local authorities is likely to grow as efforts to deal with partly developed schemes progress.


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