We now have twice as many house-hunters across Ireland as we have available homes
For would-be property buyers in Ireland right now, it is fair to say that the goalposts have shifted, and they keep shifting. In the last week we learned that despite the yoyo Central Bank lending rules, or the objectively-massive discrepancy between new homes reported versus those delivered, or even the controversial help-to buy scheme that isn’t really helping anyone… despite all of this, apparently we now have twice as many house-hunters across Ireland as we have available homes. And if that ratio is correct nationwide, can anyone guess what the ratio is in the competitive Dublin market?
It is discouraging news in the context of our so-called recovering marketplace. So, it is reasonable that buyers, and Dublin buyers in particular, re-evaluate their house-hunting status from ‘committed’ to ‘it’s complicated’. Do they really want to give up their Thursday evenings and Saturday afternoons for the foreseeable future, only to run into the same faces at every open viewing as bidding drives prices up multiple times quicker than they can earn or save it?
There is definitely an argument that favours waiting for a period of 18 to 14 months until significant new supply hits the market.
For younger first-time buyers, at earlier stages of their careers, lifestyle and family lives, waiting actually makes sense. Yes, it is likely that the market will move on over the next two years but so too will your earning potential, savings and borrowing-power if you choose to dedicate yourself to it. It is true that property price increases tend to exceed inflation and income increases, however, it is worth noting that the prevailing shortage of suitable property – or any property – is adding a chunky premium on almost every residential property sold. This will continue until the new developments are delivered in a flood rather than the trickle we have seen in the first quarter of 2017. If buyers are unsure about waiting, it might be worth checking local authority website for planning permissions granted, or more importantly, commencement notices served. This will be fairly good indication of the volume and type of property expected to be delivered locally over the next two years.
For those who feel that waiting is not an option for them, here’s the harsh reality – get ‘spendy’ or get smart. I recommend getting smart, or perhaps it’s kinder to advise people to get more strategic in their approach to finding their ideal home.
There is a learning curve that comes with buying your first home that many buyers don’t fully appreciate. People mistake years of taking in the – often contradictory – media commentary and months of property stalking, both on and off-line, with practical, on-the-ground knowledge. What generally happens is that most house-hunters start with an extensive list of criteria that is at best unrealistic, and at worst, frustratingly, inaccurate and blatantly unhelpful.
We have greater transparency (still not enough but that’s a conversation for another day) and greater access to house-price data but buyers still struggle to interpret and trust this information enough to truly rely upon it.
Over-analysis is common but discernment rarely is
The truth is, unsuccessful buyers are those who tend to over-analyse the wrong data or market information. They cast the net too wide and by the time they are ready to hone in on the right property, in the right condition, in the right area, at the right price they have lost the opportunity (or have wasted so much time that no self-respecting estate agent is willing to humour another round of viewings).
But the silver lining in Dublin at the moment might just be industry’s worst-kept secret, that is, fall-through rates of purchases are on the rise again with estate agents confirming – in whispered tones – that at least a quarter and up to one-third of all properties sale-agreed are falling-through and subsequently returning to market.
But here’s the sting, despite the property listing remaining online, buyers don’t often realise they are available due to our unexplainable delay marking properties online as ‘sale-agreed’ or ‘sold’. What happens in practice is that house-hunters compile their list of potential properties, which is frustrating in itself as a huge proportion of properties listed online are already under-offer or sale-agreed. Once an intending buyer rules out a property from their search, they tend not to make further enquiries about it.
Effectively, properties that return to the market are largely ignored by ongoing searchers and, because the under-bidders have usually moved on to new opportunities, they end up attracting fewer bidders and therefore, less competitive bidding.
This is happening everyday in Dublin and represents wasted opportunities for ready buyers. It’s difficult to step back from the vortex of trying to secure your first home while you are sucked in, but it is exactly what buyers must do to in order to get a clear picture of the true market.
In short, the options for house-hunters are to wait, spend more or get strategic. There is no single right answer to suit all buyers, however, it is difficult to justify spending more without getting more.