Monday 24 July 2017

Orderly fall here but not in Spain

KEVIN MURPHY THE soft landing for Irish house prices would appear to be official.

Last week, the consensus was that house prices would rise by about 5 per cent in 2007. The IAVI, Gunnes and IIB Bank believe we are on course to do what many thought was impossible. We are climbing down from heady heights in an orderly fashion.

And thank goodness for that. The OECD last week said Spain was heading for sharp price falls, even though it was nowhere near Ireland and Britain in terms of price growth over the past decade.

The other good news for investors is that rents here are firming up. The IAVI's survey said that rental growth began to accelerate in 2006, with increases of 6.3 per cent reported in Dublin (double 2005) and 6.2 per cent in Munster (again double 2005).

The rest of the country had rental growth of 3 per cent - you'd get more on deposit - but this was still stronger than in 2005.

We need to have a period of zero growth in prices and a continued increase in rental growth before we see residential property gaining ground, particularly in Dublin and Munster, as an appetising bet for investors.

The remaining one or two interest rate hikes might bring this about by cooling prices and boosting rental demand. Speculators will then be hoping that the days of rents covering repayments may yet return.

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Swedish furniture giant Ikea turned the sod on its 29,000sqm store yesterday, at Holywood Exchange on the outskirts of east Belfast.

No big deal, you might say. Except this store was announced at the same time as the 30,000sqm Ballymun store for Dublin, which is still with An Bord Pleanala.

Dublin's Ikea was given planning permission in October but this was contested on the grounds of increased traffic congestion on the M50 and now it probably won't be open until December 2008.

Belfast was given permission last month and should be ready by December 2007. A tale of two cities?

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The genealogy of house prices might be a worthy study. One man who could do it is Steven Smyrl of the Association of Professional Genealogists in Ireland.

His Edwardian four-bedroom terraced house at number 41 Templemore Avenue, Rathgar, Dublin 6, is on the market with an asking price of ?1.25m. He's been there since April 2001, when he bought it after auction for something over ?381,000.

On the basis that he gets his asking price, it will have appreciated 228 per cent or 38 per cent a year.

Stephen is the man who, in a criticism some years ago of the clerical errors at the General Register Office, pointed out that a porter working at a Dublin hospital had signed the death register of a friend's father who had passed away.

Bad enough, you might think. But it got worse. Not only had that porter retired years earlier, he was in fact dead - and his name had appeared on numerous deaths registered at the hospital even after he had passed away.

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Quote of the week was from the London agent selling the tiny 77sqft "apartment" in London's Knightsbridge area - for ?251,000.

Pointing out that size is in the eye of the beholder, agent Andrew Scott said: "If you thought of this as the cabin on a boat, you'd say: 'It's pretty spacious.'"

Nice one, Andrew.

The basement apartment has no electricity, is in need of renovation and is only as wide as the outstretched arms of whoever happens to be standing in it. But the new owner will have the privilege of living within walking distance of Harrods and Hyde Park, even if he or she won't be inviting many people down for cocoa.

Originally, the maid's room at 18 Cadogan Place, but used as a caretaker's storeroom for more than 20 years, the point behind this grim reality is the astronomical rise in property values across London, with average values rising 22.4 per cent last year. Believe it or not, Mr Scott has had three offers on the place and may yet put it up for auction - a sign, if ever there was one, to get out of London property.

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Meanwhile, Monaco is the most expensive European location in which to buy an apartment. Investors pay an average of ?24,900 per sqm for a top-end apartment in this area. (The London cupboard comes in at ?35,800.)

In second place, according to the survey, were London's prime property areas of Belgravia, Chelsea and Knightsbridge, costing an average of ?14,522 per sqm, followed by the rest of London, at around ?7,199 per sqm.

In joint fourth and fifth position were Paris and Amsterdam, where a luxury apartment costs an average of ?6,667 per sqm.

The cheapest European location was Chisinau in Moldova at ?917 per sqm, and the biggest surprise was the increase in prices in the Baltics.

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