Demand is high for new homes countrywide, Liadan Hynes reports
"WE hadn't put a bucket in the ground since 2007," says Fred Fullard, director of Burkeway Homes, one of Galway's biggest developers, which started building again 12 months ago. Fred and fellow director Michael Burke made the decision to dip their toe in the water, he says, when they felt prices were finally getting to a point where it made sense to build. They are now in phase two of Maoilin, a 73-unit development on the west side of the city. They're taking it slowly; gone are the days of huge numbers of homes launching onto the market, but so far sales have been good.
"We're feeling it out, obviously. We're not going to plough ahead with 73 homes," he says. Phase one launched in September of last year and, within about four hours, all 13 houses had sold, at prices ranging from €239,500 to €320,000.
"There are queues of buyers," says Niall Browne of O'Donnellan & Joyce Auctioneers, who are handling the Maoilin development. "Developers are making very, very little," he says.
The Burkeway Homes story seems to sum up the situation around the country. The buyer is there, but financing is a challenge for most developers, funding from Nama is hugely important in getting projects off the ground and tight margins are a deterrent.
On the buyers' part, the new Central Bank regulations are less of a challenge than they are in Dublin, as there is more choice at a lower price point. O'Malley Construction, one of Galway's biggest builders, is on site again, with the second phase of Reilean, an east Galway development begun pre-bust, due in the next few months. Director David Casserly says buyer demand is extremely strong.
"It is picking up, but it's picking up from an unbelievably low base," says Barry Nagle of Global Properties in Cork. "No one can wave a magic wand. It will take a number of years."
They launched the first phase of Droimneach, a previously unfinished project in Bweeng, Co Cork, in December and all nine houses, at an average of €135,000, have sold.
"There are very, very few builders here who have access to finance," explains Barry. "That will change over time. If a bank sees someone has had two or three successful developments, then they might be eager to join in and finance them. Developers don't have the money. You'd have the Michael O' Flynns, who'd raise money alright, but even he'd be the exception."
Ann O'Mahony, a director at Sherry FitzGerald Cork, says there was a "strong uptake" when they released a number of existing new homes in December. They have several O'Flynn Construction schemes coming up in mid to late spring, as well as a scheme from Citidwell.
"There isn't a huge amount of building going on in new homes," says John Rohan of Sherry FitzGerald, based in Waterford City. "It doesn't pay the builder to start launching at the moment," he explains, predicting this will change as the supply in the second-hand market in Waterford is limited.
"Developers are dismayed at the prices that they're going to get for their houses and I'd say they're holding back for the time being until it increases."
In Waterford too, buyers' demand is strong. "We're actually ahead of ourselves with sales at the moment," says Guy Palmer, director at Palmer Auctioneers, which is looking after the sale of Fox Wood, a development in Waterford City which launched in June of last year. They have sold 35 units to date, from between €165,000 and €245,000.
"There are loads of buyers, the problem is stock," he reflects. "It's only getting attractive for the developer to build now because for them to make money, a three-bed semi has to be over €165,000."
In Limerick, Michael Roberts of Michael Roberts Estate Agents launched Caislean na hAbhainn in Castletroy, Limerick, in late January. The first phase of 12 units priced at €250,000 sold out within two weeks. There will be 55 in total.
"I think we're probably two years behind Dublin," he says. "In the last five years, it was cheaper to buy second-hand than build. Price per square foot now is coming back to where there is value for builders."