Blog post by Owen Reilly, July 18th 2017
The construction sector blames government and planning bureaucracy and the public blames landlords who, in turn, blame increasing regulation; the bottom line is a dysfunctional residential property market with a now chronic shortage of housing. We are seeing the effect of this on all of our clients: potential buyers compete in a market with diminishing supply while property prices continue to increase; potential vendors who should be motivated to sell are not finding the homes to trade up to and down to and they remain sitting tight… Not surprisingly, all Q2 market reports attest to continuing price inflation. In their Q2 2017 reports portals Daft.ie and myhome.ie reported quarterly increases in average list prices nationally of 4.3% and 5% respectively and, according to Daft.ie, prices have risen by 10% in Dublin in just the last six months.
Strong prices up 11% and fast sales in competitive market
A summary of our own sales transactions in our market area of South Dublin, Dublin’s city-centre and Docklands has highlighted a quarterly average price per square metre increase of 11%. The overall average per square metre price that we achieved during this second quarter was €6,743 (€626 per square foot). 59% of our buyers overall were investors, down from 65% in Q1 – confirming first time buyers are more active in the current market. Selling times were brisk and we saw an average time on the market of 6.6 weeks; in Docklands the average time on the market was 4.5 weeks.
Landlords hold their own but rental regulations increase
So far this year, more than 53% of our lettings have been concluded subject to the new ‘rent predictability’ legislation enacted last year. Notwithstanding this, our rents agreed for Q2 for one, two and three-bed homes across South Dublin, Dublin’s city centre and Docklands averaged €1,561, €2,132 and €2,700 – with the average rent up 3.6% on 2016 and up 4.4% on Q1. Rental legislation that is becoming more onerous is rendering the rental market increasingly unattractive for landlords and we are observing clients plan to exit the market.
The demand for housing stock on both sales and rental markets is unequivocal and we would suggest there are many small policy changes that would help: reducing parking space requirements when we see tenants don’t need parking; facilitating flat conversions in city-centre locations where large houses are no longer in demand; let us build higher – higher density and higher buildings – particularly in Docklands, the city centre and along main transport routes – and let us incentivise property owners to bring vacant homes into use. We suggest a framework that will be attractive to developers and landlords – and then let the market do the rest.
(Please contact us for our Docklands Residential Update, July 2017 for information specific to the Docklands market.)
Blog post by Owen Reilly, July 18th 2017
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