House prices hold firm as demand shifts from the cities
:: Mortgage approvals will be the next key test
PROPERTY prices have weathered the impact of the Covid-19 pandemic during the past three months.
However the coronavirus appears to have sparked a big change in the type of properties that buyers are seeking.
Despite fears of a downturn during the Covid-19 crisis, the price of a three-bedroomed semi-detached house across the country fell by just a fraction of 1pc (-0.15pc).
The average price dropped to €234,667, which is equivalent to an annual decline of 0.5pc, according to the Irish Independent/Real Estate Alliance (REA) Average House Price Index.
This was despite predictions in some quarters that the market was in for a tumble thanks to the outbreak.
Gardens, potential home-office space and, most crucially of all, broadband reliability have become the main questions to estate agents.
REA spokesperson Barry McDonald said that while the current outlook is positive, and there appears to be significant pent-up demand, the coming months will reveal the full impact of the coronavirus pandemic on mortgage approvals.
The Irish Independent can reveal the state of play in the property market from data covering sales in the second quarter of this year.
It appears that during the months when the coronavirus crisis was at its height, vendors have simply sat tight and held to their prices.
Meanwhile new homes have been paused, causing a pinch in supply.
The quarterly index is produced using data based on actual sales achieved for Ireland’s most common house type, the three-bed semi detached.
“Although sales slowed during the lockdown, a downturn did happen and, despite fears, very few sales fell through or had to be renegotiated,” said Mr McDonald.
However, REA members all over Ireland have noticed a sea-change in what buyers are seeking.
This is due to the Covid-19 outbreak and a realisation that home working is providing an ultimately practical option over commuting to city offices.
Changes in the world of work are having an immediate effect on the second-hand housing market with a nationwide trend emerging of buyers looking to move 15 minutes outside of their urban location, where they can get more space for the same money.
Gardens, potential home office space and, most crucially of all, broadband reliability have become the main questions to estate agents.
Kerry has reported a sudden jump in enquiries from people in large cities who feel that they can now work remotely and are seeking higher-end properties in one of Ireland’s beauty spots.
REA agents in Killarney have reported interest in larger properties from Dublin-based viewers who plan on working from home in the future after their experiences in the lockdown.
“The majority of our agents throughout the country have reported a release of pent-up demand since offices reopened,” said Mr McDonald.
“We are finding that people are looking for three things – more space, gardens and a guarantee of better broadband, where previously transport links were the highest priority.
“Broadband is now becoming the key selling point with agents looking to promote available wifi speeds on sales brochures.
“Previous surveys had noted an increase in people looking to work from home for a number of days a week from outer suburban counties, but the experience of working full-time out of the office has changed this into a nationwide search.
“Enquiries around semidetached properties have become more work focused with attic conversions, potential home offices and the ability to install garden rooms suddenly high on people’s agendas.
“For now, the numbers of enquiries are growing steadily with people reacting well to the new rules around individual viewings, carried out in a socially distanced manner,” added Mr McDonald.
Over the past three months, the price of a three-bedroomed semi in Dublin City area remained the same at €427,167.
Over 12 months, this reflects a fall of 1.3pc, thanks largely to the Brexit-related uncertainty of last year.
The only part of Dublin showing a fall in the most recent three months was the north county (at -0.8pc).
In the country’s major cities outside Dublin – Cork, Galway, Limerick and Waterford – prices remained static over the past three months at an average of €255,875.
Over the year to June, they show a slight rise of almost 1pc.
Prices in the capital’s commuter counties fell slightly by 0.25pc in the past three months, with the average house now selling at €246,944 – down €3,000 on its June 2019 average.
Time taken for a home to sell, unsurprisingly, increased from nine to 10 weeks, with viewing and marketing processes slowed down.
“This is likely to continue due to restrictions on viewings and will accelerate the need for the industry to adopt time-saving processes such as online data rooms where all documents are visible prior to marketing a property,” said Mr McDonald.
“Covid-19 has seen an urban/ rural split in the investor market, with small builders looking to buy up properties in areas for renovation, while some landlords are leaving markets in the bigger cities due to the possibility of falling or frozen rents.
“The REA network attributes the Central Bank’s mortgage lending restrictions as key to maintaining a sense of calmness in what has been a robust market over the past few years.”
Over the year to the end of June, average house prices in the cities have increased by 2.9pc in Galway (€286,750) and 2.5pc in Limerick (€205,000), while average three-bed semis have remained unchanged in that time in Cork (€320,000) and Waterford (€215,000).
A lack of properties coming on to the Galway market, coupled with a delay in new housing stock, have created a demand that should keep prices strong in the western city, according to agents REA Halnon McKenna.
Waterford agents REA O’Shea O’Toole report an upswing in vendors placing houses on the market in the expectation of a strong selling price, but aware of a longer time taken to sell.
‘Enquiries around semi-detached properties are more work focused’