Simon quoted in Mail on Sunday 15 December property review and 2014 predictions

1. Date 15 December 2013
Page 44,53
Six property experts take the market’s
temperature and prescribe their own routes to recovery
Prices will rise in 2014 but
t
banks must start lending
ALAN
MCQUAID
Economist, Merrion Capital
What we found out about
the property market last
year:
That Irish people are still in
love with property despite
the huge crash in recent years and
many people overseas see good
value in Irish real estate at the
moment if the anecdotal stories of
strong international interest from
the likes of China and Russia are to
be believed. There also appears to
be a lot of money floating around
with a significant amount of transactions being taken up by cash.
Biggest change I saw in 2013:
The pick-up in the property
market was quicker and more sustained than I had expected and it
looks like there will be an overall
increase in prices for the first time
in six years, when most analysts
were talking about another year of
decline at the start of 2013.
Buoyed up by:
Clearly buoyed up by a lack of supply of houses, particularly in the
Dublin area; demand for more
family homes; a large element of
cash buyers and an improvement
in the labour market.
i
i db
Q
A
Disappointed by:
The number of mortgage buyers
appears to be low, which raises a
question about credit availability.
Banks are saying they are lending, so it may be more of a demand
than supply issue. Given the time
it takes to go through the whole
mortgage process, I suppose it
should be no great surprise that a
vendor faced with two prospective buyers (one with cash and the
other with a mortgage) is opting
for the cash buyer the vast majority
of the time. Some individuals/couples may therefore feel it is a waste
of time looking for a mortgage at
this juncture. But I don’t see there
being an endless amount of cash
buyers, so something will have to
give in the end.
Lessons we still have to learn:
Prices can go down as well as
up and low interest rates cannot
last forever. That said, I don’t see
the European Central Bank hiking rates until 2015 at the earliest
which is good news for those on
tracker mortgages. However, irrespective of what the ECB does,
those on variable rate mortgages
will still be at the mercy of the individual banks.
One thing I’d like to see in
2014:
This could be a change in bank-
ing policy re trackers (or whatever
ld
b l
d
d
would create a balanced and
healthy market). Those on variable rate mortgages cannot go
on forever subsidising those on
a tracker mortgage. However, it
is hard to see an easy solution to
this. I would also like to see a more
general recovery in the property
market than simply just Dublin
and the other major cities. The
worry is that rural Ireland will be
left behind and we will have an
unhealthy urban/rural divide.
My predictions for next year:
Looking forward, it is hard to see
how house prices can keep on
rising indefinitely without the
banks returning to more ‘normal’
lending practices and making
credit more freely available than
at the moment. The market cannot
survive on mainly cash transactions and only limited mortgage
draw-downs.
Still, the supply issue notwithstanding, the big driver in my view
over the next 12 months or so will be
disposable income and in particular
employment prospects. The recent
signs of general improvement in the
labour market and on the jobs front
should help sustain the housing market
recovery in the short-term, especially
in Dublin, though there may be a lag in
the rest of the country.
Overall, I see a low to mid single
d
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2. Date 15 December 2013
Page 44,53
digit average price rise in Irish house
prices in 2014, with Dublin posting the
biggest increase.
KEITH
LOWE
MD. Douglas Newman Good
What we found out about
the property market last
year:
Last year was proof, if proof
were needed, that the property market in Ireland has life
in it yet and that property prices
have fallen too far and almost
certainly overcorrected in certain locations, particularly in
Dublin. This was demonstrated
by a quick rebound in property
prices with five consecutive
quarterly price rises in the
capital as they moved towards
equilibrium or fair value. This
was inevitable as property
prices had fallen too far, especially in Dublin, a view that was
echoed by many estate agents,
economists, the OECD and commentators at the Central Bank.
Biggest change I saw in 2013:
Apart from a surge in property
prices in the capital, the biggest change in 2013 was the very
high level of cash buyers, which
accounted for around 57% of all
sales in the first half of this year.
This was up from a little over
a third of all sales in 2012 and
is much higher than the 30%
reported in the UK this year.
However, the number of cash
transactions appears to be moderating with a marked reduction
to around 35% in September
– the latest available figures.
The high number of cash buyers
made it quite difficult for potential purchasers with mortgages
h
d
Q
A
to compete. This proved very
frustrating for many and should
not be as prevalent in 2014.
Buoyed up by:
I am heartened by the level of
interest from both domestic and
foreign investors in the residential property market. The
returns for investors are better than ever. The reason being
that property prices are low and
rents are rising – hence yields
are strong. Couple this with the
fact that deposit rates are at all
time low and one can see the
attraction for investors to purchase residential properties in
the capital. Some entry level
properties are offering 10% –
15% returns in Dublin, Cork and
Galway and this beats earning
1% or 2% interest in the bank and
then paying DIRT!
Disappointed by:
I view the Government’s most
recent budget as a missed opportunity. Demand in Dublin is
considerably exceeding supply, forcing up prices. Other key
urban areas such as the cities of
Cork and Galway have reported
stock shortages and upward
pressure on prices. The population in these areas is increasing,
yet the level of housing stock is
stagnant. In Australia and the
USA governments introduced
grants and tax credits for new
homes sales in an effort to boost
supply. The system was so successful that it was extended
twice in both countries. If construction is to re-start, the Irish
government should also be
assisting in construction finance,
be it directly or by guaranteeing
finance to the banks.
Best sale of the year
57a South Hill in Dartry, which
had an asking price of €895,000.
There were number of bidders
h
d
l f h
who competed strongly for this
lovely family home which eventually sold for €1,300,000, 45%
over the quoting price. This is
a great price for the area and
reflects the desire for and shortage of good family homes.
Lessons we have to learn:
Like it or not, property is a key
driver to economic recovery.
History shows that there has
never been an economic recovery that has not always coincided
with a robust and well-functioning housing market.
My predictions for 2014:
It is my belief that property
prices in the capital will rise by
10 – 15%. We will also see some
recovery in other urban areas
but remote rural areas will take
longer to recover.
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3. Date 15 December 2013
Page 44,53
More domestic buyers
What we found
out about market:
Confidence has
improved
among bidders and
buyers. Bidding was
brisk and plentiful,
reflected in the large
attendances at each
auction. Many bidders
commented that this
was a good time to
buy as they felt prices
had stabilised and
Q
A
ROBERT HOBAN
Director of Auctions
Allsop Space
demand was growing
in good locations.
Biggest change I
saw in 2013:
The strengthening of
the domestic Irish
buyer. In 2012, 15% of
our buyers were from
overseas. This
What we found out about
the market last year:
2013 was a gamechanging year for the
property market, the
combination of very low supply
particularly in the regional
centres and pent-up demand
resulted in a much more
competitive bidding
environment with resultant
price inflation in Dublin, Cork
and Galway in particular.
Biggest change I saw in
2013:
When you compare the start of
2013 with the closing months,
the change in sentiment toward
property and the more positive
outlook is very notable.
Buoyed up by:
The increasingly positive view of
Ireland abroad as a competitive
and enjoyable place to visit and
do business. It is a pleasant
reminder to us that our best
years may be ahead of us
despite the hard lessons that
have been learned along the
way.
Q
A
dropped by 3
percentage points to
12% in 2013.Domestic
bidders are now
buying 88% of
properties.
Buoyed up by:
The growth of the
commercial and
but cash won’t be enough
investment sector.
Bigger and bigger lot
sizes are now being
sold. In Tuesday’s
auction, €3.25m was
paid for a large office
block in Limerick (River
House, Charlotte’s
Quay), rented to the
OPW, after heated
bidding. The property
had been for sale for six
months through another
agency by private treaty
with three offers ranging
from €2.6m to €2.8m. 4
Disappointed by:
The lack of quality stock
available as a result of
too few debt deals
taking place in Irish
credit institutions. The
understandable
difficulty is that the
banks would close
overnight if all debt was
written down, yet
increased lending into
the market is badly
needed in 2014.
Lessons to learn:
If normal levels of
finance are not
forthcoming, the cash
market cannot be relied
upon to soak up the
supply of properties. The
number coming to the
market in 2014 is set to
increase greatly as
banks line up buy-to-let
portfolios for disposal.
Things are looking up
– but we need to start
building new homes
MICHAEL GREHAN
MD. Sherry FitzGerald Group
Disappointed by:
The lack of joined-up thinking
that is required from the various
bodies to the property needs of
Irish society on the back of a
fast-growing population which
has grown by 8.5% since 2006.
Best sale of the year
One of our most notable sales
of 2013 in terms of both value
and profile was that of Abbeville
in Kinsealy, the former home of
the late Charles Haughey and
his family. Abbeville is a
stunning private estate, yet its
proximity to Dublin and its
international airport made it a
particularly attractive property
to both domestic and
internationally based buyers.
Whilst it is a hugely important
sale, it is also extremely
satisfying that the buyer
appreciates the rich historical
provenance and architectural
merit of Abbeville and plans a
comprehensive restoration.
Lessons we still have to
learn:
We need to plan the future. At
this juncture, we have
experienced five or six years of
limited construction activity but
strong population growth. As a
result, shortages of available
houses have emerged. We need
to begin construction activity in
all our regional cities but also
perhaps we need to do so most
urgently in Dublin.
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4. Date 15 December 2013
Page 44,53
g
ANGELA KEEGAN
MD. Myhome.ie
What we found out about the property
market last year:
The market has finally bottomed out. The
property market is cyclical in nature but
because of the recession the downward cycle we
have just emerged from was longer and much
deeper than anything we’ve seen previously.
Biggest change I saw in 2013:
Confidence has come back with more potential
purchasers completing transactions. The other
big change was the double-digit price increase
that we’ve seen in some areas in Dublin.
Buoyed up by:
After six very challenging years it’s very positive
for the market that prices have started to
recover. However, that comes with a caveat that
we want and need more transactions.
Disappointed by:
The lack of supply. This is restricting normal
market movement and driving prices higher. For
example, MyHome.ie has 3,200 Dublin
properties for sale. In January 2012 the figure
was 6,093! The price increase in Dublin is not
sustainable in the long term.
Best sale of the year
Milverton, Herbert Park, Donnybrook auctioned
by Lisney. It broke records in 2004 when it sold
for €8m and broke records in 2013 when it was
sold for €4.6m. It shows that a good house in a
good location will always buck the trend.
One thing I’d like to see in 2014:
An overall solution to the underlying problem of
negative equity and more sustainable solutions
by the banks for the over-borrowed.
Q
A
SIMON STOKES
Residential Group chairman, SCSI
What we found out about the property
market last year:
There is greater pent-up demand in Dublin
than anyone realised. There is also a
significant number of cash purchasers looking
for good quality family homes.
Biggest change I saw in 2013:
Huge increase in demand for family homes in
well-established residential areas. Increased
interest in investment properties, particularly
smaller commercial investments under €1.5m
Buoyed up by:
Increased demand and interest generally.
Market is staring to recover – prices have risen
significantly in Dublin over the last 12 months.
Disappointed by:
Lack of political will to get banks to lend despite
the billions poured in to rescue them.
Best sale of the year:
House requiring extensive refurbishment on
Northumberland Road, Ballsbridge – over
€800,000. It is lovely to see a magnificent
Georgian building return to its original purpose.
Lessons we still have to learn:
There will be no general economic recovery
without bank lending.
One thing I’d like to see in 2014:
Government and local authorities realising that
we need zoned lands suitable for building family
homes. Banks being more realistic about
lending to developers and home buyers.
My predictions for next year:
Continued growth in Dublin residential prices.
Gradual improvement in other urban centres.
Q
A
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5. Date 15 December 2013
Page 44,53
GREAT
PRICE:
Demand for
57a South
Hill in
Dartry,
Dublin was
so high it
was sold by
DNG for
€1.3m, 45%
above the
€895,000
asking
price
TOWN AND COUNTRY:
Walford, on Shrewsbury Road in
Dublin 4, owned by a trust linked
to Gayle Killilea sold privately for
€14m, while Charles Haughey’s
former estate, Abbeville in
Kinsealy sold for €5.5m
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6. Date 15 December 2013
Page 44,53
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