South West Ireland Property Market Update 2007

2006 Review and predictions for 2007
There have been conflicting reports published regarding the Irish Property Market during 2006. The larger firms of Estate Agents would have you believe that throughout 2006 the Irish property market was booming, with record sales and record prices being achieved in every sector. The Banks and lending institutions report a more realistic, and probably more accurate, view that with six ¼ percent interest rate rises during 2006, home loan repayment costs have risen, and this is now reducing the purchasing power of all buyers, not just first time buyers, which, as we see it has to bring a more realistic pricing structure by selling Agents. We observed that the granting of mortgages was not so much tied to income, but more on ability to repay, and the loan term can be extended to 30 and even 35 years.  

During the Spring Market of 2006 we observed price hikes of 10 – 15 % being achieved by the selling agents on similar properties compared with Spring 2005, especially for property under 350,000 € where demand exceeded supply. However this rise levelled off and indeed fell back in the second half of 2006, and the Banks and statisticians recorded an average annual price increase across Ireland of 6 % in 2006. We observed that in the second half of 2006, the Agents were taking on more property in country areas than they were selling, especially over the 500,000 € level, and registers of property ‘for sale’ are growing, not just in the upper price ranges. However the Agents and the property owners  continue to ‘price residential properties up’ with the result that few are selling at around the guide prices quoted and owners are holding out to get their price rather than accepting a realistic offer!

For example.  In early 2006 a new 3 bed semi in Clonakilty was selling for low 300,000’ €, and there was a competition for every house, with sale prices being agreed in excess of guide prices.

By December 2006 the guide price of similar 3 bed semi’s had risen to over 350,000€, which has proved to be more than the market is prepared to pay, hence there was a good choice of such houses for sale but due to  reluctance on the part of owners to accept offers below the guide price, the houses remain unsold. Irish homeowners have become so acclimatised to a rising market that they have not yet accepted the change.

As we enter 2007, a Buyer’s Market has returned and Agents will need to price houses realistically in order to sell them.  The main problem as we see it is that for the past decade the Auctioneers have been fortunate to have sold houses in a busy seller’s market, business has flourished and the number of Auctioneers has doubled over the past 6 years. Therefore many have not had the experience of selling houses in a buyers market, and may need to seek professional guidance in marketing techniques required to succeed in a different market.  Irish Auctioneers marketing techniques are very different to other European Countries in particular the UK.  It is said that the Irish Estate Agents ‘have houses for sale’ rather than ‘sell houses’.

The National Press are mixed in their opinions on the future of the residential property market.  The Irish Examiner says lets wait and see. The Sunday Times (Ireland) is more confident and predicts a buyer’s market and even gives buyers tips as to how to secure the best deal.  It is our opinion that unless the Estate Agents guide their Clients and develop  more realistic pricing and marketing policies, stockpiles of property could build up, houses will remain unsold, and before you know it Estate Agents could be closing their doors.   Many properties currently on the market are considered to be overpriced by at least 10%.  Of course there will always be individual properties, especially by the coast and in the cities, which will sell well due to their location and shortage of supply.

Without question, 2007 will be a year where buyers need to be guided by professionals on the best type of investment properties to purchase, what the true value of a property is, and the most suitable location for their individual requirements.

2006 saw the opening of Cork International Airport’s new 80 million € terminal, capable of handling up to 5 million passengers a year.  During 2006, 3 million passengers will have travelled through Cork International Airport, now with flights to over 40 other destinations throughout the UK and Europe.

During 2006, Ireland’s population grew to 4.3 million, mainly due to a rise in immigrant population recorded at over 200,000, including 80,000 from Poland.  The flow of UK based families, and in particular professional couples, moving to work in the growing IT and Pharmaceutical Industries in Cork continued, as the Technology Parks around Cork and Clonakilty continue to expand and attract  new employees from many countries including the UK, Germany, France, Holland and Italy.

Country Houses & Estates
The Country House market in Co Cork  & Kerry saw a regular supply of such houses come to the market, but they were slow to sell, many taking 6 to 12 months to eventually find a buyer, and generally at below guide prices.  Better value country houses can often be acquired by travelling further north, where we acquired a Georgian country house with 90 acres for under 1m € in Co Tipperary, and another in Co Limerick with land for under 600,000 €. Many of the Country Houses we source for clients are through private contacts and do not come on the market.

Investment Property
Across all sectors investment property remained attractive for investors in 2006, due to continued strength in the construction industry as a whole, with continued increase in property values, providing an average yield of 10% per annum (4% rental income plus 6% increase in value) on residential investment properties, which are needed to satisfy the increasing demand for long term rental homes, and from developer clients requiring properties for renovation.

West Cork
Demand is still high for many types of residential property. Best value is in the country within 10 miles radius of the towns of Clonakilty & Skibbereen, where you can purchase a restored 2/3 bed detached cottage for around 200,000 €, or a traditional farmhouse with outbuildings/land for around 325,000 €, (less if in need of restoration).

Due to ambitious pricing there has been a slowdown in purchases of houses in or within a mile of the major towns of Clonakilty and Skibbereen.  A new 3 bed Semi in Clonakilty now costs over 340,000 €, (Skibbereen around 275,000 €), yet in the villages 10 miles out the same property can be bought for far less.  New / Modern 4 bed detached Dormer/two Storey houses in the country with an acre can still be purchased from 375,000 €, and there is a wide choice of ‘Executive’ style houses. Properties with a sea view are still available from 350,000 €, the better the position the higher the price.

Coastal Homes
This is a very specialist market where properties can be acquired, but rarely come on the market.

Ireland enjoyed another excellent summer, with high levels of sunshine and mild temperatures throughout the year thanks to our Gulf Stream climate.  Many still prefer to holiday or live in Ireland, without the pitfalls of language differences and driving on the other side of the road. UK based as well as other buyers are still discovering that a move to Ireland gives them a safer cleaner environment in which to live, whether as a full time or holiday home.

New Houses
There is a good choice of quality individual Architect designed new houses built in villages and country settings.  On the edge of the towns, cities and villages a record number of new houses have been built, but there is a noted general slowdown in sales on the estates.

Building Sites
We are still able to acquire individual building sites on behalf of clients with unconditional Planning Permission, though the Planning policies and conditions vary between the different County Councils. Cork County Council are granting fewer unconditional planning approvals. Buyers need to be able to comply with any planning conditions stipulated before purchasing a site.  We guide clients on every aspect of land purchase, as there are many pitfalls.  Sites can be purchased from from 140,000 € in north or mid Cork, or from 165,000 € in West Cork. 

Agents are eager to collaborate with us as they know our reputation as one of Europe’s leading home finders and recognize our Clients are genuine willing and able buyers! We are sometimes able to acquire property for Clients before it actually comes on the market with Agents; some properties are acquired privately at realistic prices for our Clients!

The Property Finders Ireland offers full Corporate and Private Relocation Services to clients moving to live in Cork City and the suburbs or any part of Co Cork
Click here for more information.

The Property Finders also have Offices in Co Wexford, covering South East Ireland including Co Wexford, Co Waterford, Co Wicklow and Dublin, run by Martin Murphy.