It’s a New Year but what exactly does it have in store for the property market?
Both economists and estate agents would appear to be suggesting that growth is on the horizon.
We’re just over a fortnight into 2014 but already there has been a number of positive indicators that the market is set to turn a corner in the months ahead.
Perhaps it already has. After all, Sherry FitzGerald were the first to kickstart the year with a report that found that property prices nationwide rose by 9.2% last year.
While Dublin’s 14.1% growth in 2013 undoubtedly led that revival, even excluding the capital the rest of the country still saw prices grow by 3.2%.
If there is growth outside of the capital this year then it is likely to be small once again but NAMA, for example, clearly feel things are improving based on their decision to wind up the 80:20 Deferred Payment Initiative from next May.
Clearly, there are many areas of the country still in decline but key urban areas are starting to follow Dublin’s lead in showing genuine growth for the first time in years.
Of course, stock is the big factor. At present, it’s at an all time low in Dublin with the number of properties for sale in the capital falling by 30% in the last year. The lack of availability of good, reasonably priced family homes has undoubtedly driven prices up and this shortage will lead to price surges of as much as 15%, according to new figures in the report of the Expert Group on Repossessions.
This problem is not as pronounced elsewhere but there are problems emerging in the likes of Cork City, where sales in the county areas are now outperforming it.
What could be a huge determining factor in how the market performs this year will be the banks. Will they loosen the purse strings tightly and offer more credit to both businesses and people seeking mortgages and will they start to sell some of the thousands of properties they are sitting on following repossessions? The answers to those questions are unknown but depending on their outcome it could have a huge say on what happens in the year ahead.
There are plenty of reasons to be optimistic though. Small, albeit steady, growth can now be seen in the construction sector while Dublin has just been tipped as the best place to buy property in Europe this year in a new poll of European real estate experts. Consumer sentiment is also at a six year high.
Last year commercial deals approached €1.9 billion, a four-fold increase on 2012, and that is likely to continue into 2014.
According to Robert Ganly, managing director of estate agents Ganly Walters: “As yet the recovery is most recognizable in Dublin and it will spread out to other areas over time.”
While Mr Ganly admits that there are many developments around the country that should never be built, most industry experts admit that there is a need for more building in areas that require it.
Whisper it quietly but the market would appear to have turned a corner. This sort of steady growth is good for the overall economy but until issues such as stock levels, negative equity and availability of credit are dealt with, we will struggle to get to a point where the market is deemed healthy and normal – and, no, that doesn’t mean a return to the Celtic Tiger days but simply to a place where the property market assists the economy and people can buy, rent or move to suit their needs at any given time.
What are your predictions for this year? Have your say below…