Property bubble! Soaring prices! Crisis! Crisis! Crisis!
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LOCAL MARKET HOUSING ANALYSIS NOVEMBER 2017 – MICHAEL GRIFFIN AUCTIONEERS
Property bubble! Soaring prices! Crisis! Crisis! Crisis! Flashy click bait headlines feature daily as our national obsession with property takes off yet again. Now I’m not for a minute understating the severity of the situation in the private rental sector and the homelessness issue in the capital and other parts of the country, but the talk of another property bubble (in this part of the country at least) on the horizon is far too early too call.
Comparing transactions in Tramore, Co.Waterford on the Irish Property Register from 1st January to the 1st November 2016 and the same period in 2017 highlight some interesting statistics and observations. There were 140 houses sold up to 1st November 2016. Out of this number only 5% of transactions consisted of new homes. One year on, and up to the same point in 2017, 141 houses were sold, with 24% of transactions consisting of sales in the new homes sector. This represents a fourfold increase in the sale of new homes.
Over the past 12 months, the price of a second hand 1100 sq.ft 3 bed semi detached home has fluctuated. Last December 2016, a 3 bed semi in Tramore sold for €180,000, rising to and selling for €192,000 in the middle of 2017 and now the same standard 3 beds are being advertised back at €180,000 after stalling on the market for a few months. New 3 bed semi homes are currently being offered for sale for €210,000. A similar trend is being observed for second hand 4 bed detached properties. This clearly indicates that there is a preference for new homes.
This observation may be attributed to the government’s Help to Buy scheme, coupled with the increase in supply of the new homes sector (both South Eastern Construction and McDonald Bros have new sites open on the link road) leading to the second hand homes market having to become more competitive on a price point to contest with the new homes offering. The government incentive to aid 1st time buyers has increased their desire to purchase new homes, and an added incentive of 2-3% cashback with some lending institutions make it quite the proposition to buy a new house. Property prices had increased 7-8% year on year from 2013 – 2016, but this year the statistics suggest that prices in the areas where new homes are servicing demand, a natural stabilization is occurring. This is a trend that may continue in the higher end of the market once supply is being serviced in this sector in the next 2-3 years.
John Maynard Keynes is quoted as saying: “When the facts change, I change my mind. What do you do, sir?” So at this point, I’m saying that I don’t believe we are on the verge of another property bubble in this locality – the market is correcting itself naturally as supply begins to meet demand and builders are now finding it viable to service the market once again – in turn causing prices to stabilize in the second hand homes market. All protagonists, buyers, sellers and builders are benefiting from a market that is evolving naturally. Based on the anecdotal evidence outlined above, I believe there is no better time to buy or sell a property. Prices are at an acceptable level for sellers to sell and it is still very much affordable for buyers to buy. As for my prediction for the future…..I’d prefer to stick to the facts.