'We have bids on nearly every expensive house'
A dramatic drop in top-end prices is luring cash buyers, including wealthy ex-pats, back to the Irish scene where they hope to bag a bargain
Published 24/04/2011 | 05:00
THE bombed-out property market might just get the kickstart it needs if the state bad bank of Nama starts to lend money to finance-starved buyers.
Earlier this month, Nama boss, Frank Daly said he was exploring how Nama could provide money for property deals -- as part of its efforts to restart the Irish property market. While many first-time buyers will be glad of such a move, there are other buyers who are already coming out of the woodwork. And these new buyers -- cash-rich buyers chasing properties with price tags of €1m plus -- don't need Nama's money.
"We have bids on nearly every expensive house we have," said Keith Lowe, managing director of Douglas Newman Good (DNG). "We've way more buyers than properties in the €1m to €2m price bracket. The market is not booming but for the first time in the last four years, there's considerable interest in the €900,000 to €1m bracket."
Estate agents say that interest in top-end properties started to step up last January. The new top-end buyers are typically cash buyers -- ready to move back into the market after sitting on the fence for a few years, and ex-pats eager to snap up a bargain.
"There are still a lot of people who are doing very well and who haven't been affected by the recession," said Lowe. "One out of every three houses we are selling is to a cash buyer. Most of the people who bought properties for €4m to €6m during the boom were property investors or people in the building industry. They've been replaced by medical professionals, receivers and accountants, legal professionals and software experts."
Felicity Fox, managing partner of estate agents, Felicity Fox, said that if a seller has the right house, he could have three to four bidders for his property. "A year ago, he would have only had the one bidder," said Fox.
It is the dramatic falls in top-end prices which is enticing buyers back into that market, according to Fox.
Last month, DNG sold a house on Dartry Road, Dublin 6, for less than €1.65m. That house would have sold for between €4m and €4.5m in 2006, according to Lowe. DNG sold a house on Belgrave Road, Rathmines, Dublin 6, for less than €1.65m just before Christmas. The same house would have fetched up to €3.5m during the boom.
Savills recently sold a house in Breffni Terrace, Sandycove, Dublin, for €2.5m. "At peak, this house might have sold for €3.75m," said Ronan O'Hara, director of Savills.
Sherry FitzGerald is quoting €3.95m for Ardbrugh House, Ardbrugh Road, Dalkey -- a detached house with sea views. "At the peak of the market, we believe this house could have achieved at least €10m," said Michael Grehan, managing director of Sherry FitzGerald Residential.
Sherry FitzGerald sold about 13 properties with price tags of more than €2m last year, according to Grehan. Barely four months into 2011 and the estate agent is already negotiating the sale of 14 houses priced at €2m or more. Seven of these properties are priced between €4m and €7m.
Ironically, the busiest day in the last three years for the Sherry FitzGerald website was March 31 -- the same day that the Central Bank announced to an appalled public that the Irish banks could need another €24bn to keep them on their feet.
"People are probably sensing that we are a long way through the downturn and that maybe now is the time to get back into the market again," said Grehan.
Ken MacDonald, managing director of Hooke & MacDonald, said the cut in stamp duty in last December's Budget -- where the stamp duty on properties over €1m was reduced from 9 per cent to 2 per cent -- was another big carrot for would-be buyers.
"People who were sitting on the fence are coming out now," said MacDonald. "There is a feeling that if we are not at the bottom of the market, we are very close to it. A good proportion of interest is coming from ex-pats in Britain and other parts of Europe who feel they can now afford to come home."
A recent tightening up of non-domicile tax breaks in Britain has prompted many over there to eye up Irish property, according to Robert Ganly, head of residential and country with Knight Frank. "A lot of these people are looking at Ireland from a tax perspective," said Ganly.
Although economists don't have any evidence as yet to suggest a pick-up in the top-end of the market, some believe the drop in prices in that area -- as well as the short supply of such properties -- could trigger an uplift.
"The price declines in the top end of the market have been so large that it has probably encouraged some activity," said David Duffy, economist with the ESRI.
Not everyone is convinced however. Alan Gray, managing partner of Indecon, said the "high-end market appears from anecdotal evidence to remain very sluggish".
Estate agents insist there is a pick-up in the top-end -- albeit a slight one. If they're to be believed and this is the first sign of life in the property market in four years, the pick-up is not to be sneezed at.
Sunday Indo Business