2020 has been a rollercoaster year for the Dublin Residential Market with COVID-19 having a profound impact on the property market and indeed our very way of life. It has also caused many people to rethink their living and working habits.
The start of 2020 was very encouraging after a flat end to 2019. The arrival of COVID-19 effectively froze the Irish property market. While our business quickly pivoted to be conducted remotely and virtually, market activity was a fraction of its pre-COVID-19 level as a result of in-person showing restrictions. In March and April 50% of our sales fell through as many buyers were understandably nervous given the uncertainty. Our active listings fell by 90% compared to Q1. As lockdown eased in June, we immediately saw a huge increase in activity and pent-up demand with really motivated buyers who got to know their existing property and neighbourhood very well during lockdown and what they offered and what they didn’t offer. Many buyers who had pulled out of sales re-engaged with us. Our average selling price during the summer was 3.48% above asking which reflects low supply and we saw strong demand for all property types across Dublin.
In the rental market there was a 50% increase in the supply of rentals in central Dublin due to the collapse of the short-term rental market. This combined with reduced demand because of lockdown created a tenant’s market for the first time in years. In April, large technology companies told their employees they can work from home for the rest of the year. This directly caused 7% of our managed tenancies to end prematurely with most of these tenants returning to continental Europe to work from home there. Rents have fallen 14% in central Dublin and suburbs since March. However, the rental market has now stabilised and we are seeing a huge pick up in demand from January as technology professionals have been asked to return to Ireland by their employers, many are tenants who left us earlier in the year.
As we entered the traditionally busy autumn market vendors were bullish given the exceptional summer activity. Our transactions for this period were up 21% on the previous quarter as more sellers were encouraged to come to market given the pent-up demand. October was a very positive month for sales with a flurry of activity during the period leading into lockdown two. The most motivated buyer we have been dealing with have been first time buyers, particularly in the sub €400,000 price range. November was a slower month with restrictions continuing for the full duration and there was a reduction in the number of properties coming to market. Owner occupiers accounted for 65% of buyers and 100% of buyers were under 400k.
Trends:
People are looking at properties in very different ways. They are looking for more space. Space to work from home and space to separate working life from living. In many cases space is coming in more important than location or at least as important. Having said that proximity to parks and grocery stores is still paramount.
Landlords continue to exit the market. 78% of our apartments sellers this year are investors exiting the market. The obvious consequence of this is that the amount of available rental stock continues to deplete. I believe there will be a rental crisis within 12 months again in Dublin.
Rents have fallen in central Dublin and suburbs by 14% at least this year.
Technology executives are now starting to buy instead of rent as Dublin has now become home. This will be a very positive development for the residential market, particularly the luxury end of the market.
A significant number of Irish people returning to Dublin are looking to buy. They are now competing with technology executives, particularly at the luxury end of the market (€1 million+).
Challenges
One-bedroom apartments are particularly challenging to rent now as people have no room to work from home.
Price trends
As always varying property types, locations and prices ranges are performing very differently. Our transactions show values on apartments and houses in the €300,000 to €400,000 are up approximately 2% as this is where the first-time buyer is most active. Apartments in the €500,000 to €700,000 has been a challenging market particularly in the Docklands and values are down approximately 4%. It would be fair to say COVID-19 has impacted the Docklands market more than any other location given the cluster of technology companies. Houses with good gardens in the €600,000 to €1.2 million range are selling very well and values are up year on year 1-2%. We had some very positive sales on houses close to the city centre, particularly in Dublin 8.
Outlook
I am now very hopeful about the prospects for next year. I do not believe the supply of homes coming to market will match demand. I expect the market to be very resilient, but I do think there will be equilibrium between sellers and buyers. I think prices will rise but not by much.
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