The Irish property market is improving but still has a way to go.
That’s according to Douglas Newman Good (DNG) chief executive Keith Lowe.
Mr Lowe was speaking at a Housing Agency lecture in Dublin Castle on Tuesday entitled ‘Owning or Renting: What is the future of Housing?’
In his intro the DNG chief outlined how despite the fact there were 47,303 property transactions last year, this was still a fall on the 48,920 recorded in 2015.
He said: “We’re on a road to recovery that will take time.”
Mr Lowe revealed that 10% of all sales recorded last year were, according to DNG research, block sales i.e. three or more properties bought on the same day by the same purchaser.
He said the total number of transactions for the last quarter of 2016 represented 2.8 transactions per 1,000 of population. While he noted this was an improvement on the 1.1 transactions per 1,000 of population in 2011, he pointed out this was still lagging behind “normal market” circumstances. He referenced the UK figure of 4.8 transactions per 1,000 of population and the Northern Irish figure of 3.6 as examples of where Ireland needs to get to.
Mr Lowe outlined how prices were continuining to rise with a growth prediction forecast of around 10% for 2017.
Indeed, he said a lot of properties had already seen their prices increase by between 3% and 4% already this year.
He said the level of new homes being built was still an issue. While the official figure of new builds last year was 14,932, just 6,426 new home sales were recorded on the Property Price Register with the balance made up by one-off builds (which accounted for 41% of all new homes), completed units not sold and investor sites which were held.
He said the fact 2,500 more new homes were built last year than in 2015 was a “positive” but encouraged local authorities and other parties to “release land into the system” for the purposes of house building.
The DNG chief executive cited a number of examples form his agency to show that the demand for both new homes and development sites was high at present.
He pointed out there had been 120 sales over the last 18 months at the Elder Heath development in Tallaght, 30 sales at the launch of the Oak Tree development in Kildare and 16 houses out of 16 sold at Castle Grange in Castaheaney.
He said builders were now much more confident but admitted his surprise that many first time buyers attending viewings had not heard of the Help to Buy Scheme.
Citing an example of his usefulness in relation to the Elder Heath development, he said first-time buyers would have needed a €38,000 deposit to buy a house in the Tallaght estate before Christmas but needed just €9,000 now.
With regard to the Help to Buy Scheme he said there were currently 3,753 applications pending but expressed his concern that the Government already had tenders out to review the scheme when it had “not even started”.
While he admitted it was a “bit inflationary” to prices, he encouraged the Government to look at the possibility of introducing home equity loans whereby the Government would take a stake in the mortgage. He said this would allow people to buy properties they couldn’t normally afford.
The system works quite well in the UK, he added.
With regard to rentals he said many landlords had been left “very unhappy” by the rent certainty measures brought in at the end of last year. He said the issue most people had with it was that it didn’t allow them to put rent up to market value.
He said this was having an effect on private landlords with 20% of all properties for sale at present across DNG’s 78 branches nationwide being buy-to-lets.
In Dublin this figure rose to 27% while in one branch in Phibsborough in the north of the city, 21 of their 41 properties for sale at present were buy-to-lets with a quarter of those receiver properties.
“Even though rents are quite high being a landlord is not attractive because taxes are so high,”said Keith.
He said when the rent certainty rules were reviewed in June he hoped landlords would be allowed to back date their rental values in order to “avoid an exodus” of landlords from the market.
He concluded by saying that while renting suits a lot of people, in his opinion buying was the better option in terms of security, stability and in finance, citing an example of how a 3 bed property in Dublin at a rental cost of €1,600 per month would cost €19,200 per annum in rent compared with €14,150 in mortgage repayments at a rate of 3.9%.
Other speakers at the event included UCD lecturer Michelle Norris and Rory O’Donnell, Director of the National Economic Social Council. Afterwards Rory launched Michelle’s book ‘Property Family and the Irish Welfare State.”