Every conversation about recovery in the Irish residential market carries the same exclusion, that it, recovery is happening in Dublin – as one Kerry woman said to me this week “a house sold here a few weeks ago, prices seem to have stopped falling and that’s good enough”. But not everywhere in Dublin is seeing the rampant increases of the past six months, for example, parts of Dublin 15 still carry an oversupply of housing stock, as does Balbriggan and Tallaght. In fact, a quick study of available properties within the city and county of Dublin, excluding those units under offer and in negotiations, confirms that the ‘pockets’ of recovery are extensive on the south side but less so on the north side, although ever-reducing stock is certainly having an effect there too. So, it begs the question, has the age-old division between the north side and south side, which had all but disappeared during the Celtic Tiger era, resurfaced? Increased values, coupled with the higher level of transactions in recent months would seem to suggest buyer bias towards South County Dublin. This appears to be equally true for home-buyers and investors, despite the higher buy-in costs. While the new national average house price, for the so-called ‘average’ home, typically a three bed semi is approximately €170,000, according to market analysts or €191,000 if the price register data is to be relied upon, house-hunters in South County Dublin will struggle to find a three bed semi for under €200,000. In fact, they are unlikely to have much choice with a budget below €300,000. Buyers on the north side will have a much greater choice of good residential neighbourhoods within that price range.
The pattern of recovery across the suburbs of our Capital has surprised most people. Staple areas like Sandymount and Ranelagh had seen little house-building activity in the boom and an analysis of the price drops would show they were among the strongest performing residential areas and led recovery, followed closely by Blackrock on the south side and Clontarf on the south side – no surprises there. Perhaps the greatest surprise was to see areas like Stillorgan, Dundrum and Ballinteer recover ahead of more salubrious neighbourhoods like Rathfarnham and Dun Laoghaire. In fact, Rathmines is now home to the most affordable three bed houses (albeit smaller, city dwellings) on the south side; its affordability beaten only by Sandyford and Loughlinstown. Carrickmines is another strong performer over recent months, despite lagging behind recovery trends since 2008. The most affordable three bed house there will set a buyer back at least €375,000 – more than double the national average.
When looking exclusively at houses, those aimed at the owner-occupier market increased disproportionately compared to investment houses. This is also true of apartments, in fact, in this column last week a price difference of almost €100,000 was noted between home buyers and investors buying two-bed apartments in the Dublin 2 docklands area. A simple explanation would suggest that home buyers are paying more than investors, whether this is due to an inflated sense of market value or competitive bidding is unclear. The scarcity of family homes has been spoken about for the past 18 months in the media, however, buyers on the grounds are feeling the effects to a much greater extent over the past three months. Until last week, the highest number of attendees for an open viewing was in excess of 80 and that was considered huge (80 plus people in a two bed apartment is pretty amazing!) but to hear that almost 250 people turned up to view a new house to the market in Dublin is truly shocking – it likens having a bid accepted to winning the lottery, whereby winners get the opportunity to spend three quarters of a million on a new home. It is difficult to rationalise jumping into the market such as it is now. With asking prices being exceeded by more than €30,000 – the equivalent to two years rent, holding back may well be a suitable strategy for some. The key to sustaining recovery in Dublin is to incentivise buyers to take on renovation projects or older houses in disrepair, rather than mortgage lenders precluding them from this type of purchase. There is little doubt that more houses are required, and Nama has provided finance for approximately 4,500 over the next year, but a first step must be to try to use the vacant houses, and perhaps re-model the unsuitable stock that exists around the city. And to avoid this situation of mismatched supply and demand happening again, the construction work planned now must provide the right type of housing in the very areas where families want to settle. Difficult as this may be, it appears to be a more manageable task than re-educating our buyers to settle in apartments for life.