Business Property & Mortgages

Wednesday 1 October 2014

Developers selling homes before they're built for first time in years

Published 25/02/2013 | 04:00

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Aidan McCarthy and Jing Ye at the Peyton development in Rathcoole, Co Dublin, where they have put down a deposit for a house

DEVELOPERS have started selling new homes off plans for the first time in more than five years, the Irish Independent can reveal.

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The ongoing recovery in city property markets combined with a bottleneck in the supply of family-sized homes means deposits are being put down in advance of construction for more than 100 new homes worth €23m in five developments in the greater Dublin area.

Deposits of €5,000 are being put on homes that are selling for between €200,000 and €400,000. The trend follows a period since 2008 in which almost no new homes were sold.

Estate agents said the revival of advance sales is down to a shortage of family-sized properties close to city areas caused, in part, by negative equity.

The latter is preventing those who bought in the boom from selling and preventing second-hand property coming to market. The revival of advance sales also coincides with the publication today of a market sentiment study by Daft.ie showing that, for the first time since the crash, more than half of those surveyed (59pc) believed property prices presented good value.

The survey indicated an 8pc increase in those wishing to buy – and that they expected to pay an average of €229,000.

Estate agents say the revival in advance bookings began after the summer in response to an ongoing shortage of family-sized homes flagged by the industry since the beginning of last year.

In at least one scheme, prospective buyers have been paying deposits for homes that haven't even received full planning permission, a practice which was unheard of even in the boom years.

At another development, new home prices have started to rise in reaction to demand.

At the Peyton scheme off Stoney Lane in Rathcoole, Co Dublin, Blackchurch Homes has taken 13 deposits since the beginning of the year for €265,000 three-bedroom homes in the final phase, which have yet to obtain planning clearance.

Glenn Burrell, of Finnegan Menton, the agency selling the properties, said the deposit system was the fairest way of ensuring buyers could reserve a home in the last phase. If the scheme doesn't get permission, they'll get their money back.

Couples

"Since the start of the year, the show houses have been really busy and we'd often have three couples waiting to see an agent.

"Our buyers have been split almost 50/50 between Irish people and non-nationals and buyers have either been working in the civil service or in the tech, pharma or financial sectors. They're looking for family-sized homes and have a preference for new property."

Elsewhere, Coonan Auctioneers says it has sold 55 homes off plan since last year in areas such as Maynooth, Celbridge and Kilcock. "Within 25 miles of Dublin there is strong demand for new family-sized homes and, in our case, its usually people with an affiliation to the area or else to west Dublin generally," said Will Coonan, who cites sales ahead of construction at Castlepark, Moyglare Hall and Griffin Rath in Maynooth, Hazelwood in Celbridge and Ryebridge in Kilcock.

In reaction to demand, the prices for the four-bedroom homes at Castlepark have risen from €380,000 to €400,000, another first since the property crash.

Meanwhile, Savills has sold 20 family homes off plan at The Grove in Lucan, with three-beds priced from around €200,000.

Savills director Ronan O'Driscoll said: "Most of the big boom-era developers have been wiped out financially and the new homes being developed today in response to the shortage are being built mostly by long-established firms who took a sensibly cautious approach during the boom years and didn't get carried away."

A report last week by housing market economist Ronan Lyons, in association with the Irish Banking Federation, cited negative equity as one of the reasons behind an emerging jam in the market.

Irish Independent

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