Saturday 21 October 2017

Headache for buyers over house price divide as Dublin goes up

Donal Buckley and Tom Molloy

THOUSANDS are now facing a major dilemma on when to buy a house as prices rise in Dublin -- and fall in the rest of the country.

This means those thinking of buying in some parts of Dublin could -- for the first time in years -- pay more if they delay their decision.

In contrast, those looking for a home outside Dublin could end up with houses that lose more value as prices continue to decline.

The dilemma is compounded by the looming deadline for mortgage tax relief, a government incentive that appears to be underpinning the Dublin trend in particular.

It is primarily targeted at first-time buyers and, to a lesser extent, people trading up.

However, there are concerns about prices staying at current levels if the Government pulls the plug on the incentive, as planned, at the end of this year.

New Central Statistics Office figures show the emergence of a widening gap between the increase in prices in the capital and the decrease elsewhere.

An Irish Independent analysis of recent sales also shows an acceleration in the speed at which the gap is widening, and that the CSO figures are lagging behind the market.

The CSO figures show house and apartment prices in Dublin continued to increase for the second month in a row in April.

But the pace of the fall in houses prices outside Dublin during the month has also accelerated.

House prices outside Dublin fell by 2.1pc in April -- a sharper decrease than the 0.6pc in March. In contrast, the pace of Dublin apartment price increases has accelerated from 2.3pc in March to 2.6pc in April.

And a number of recent sales represent concrete examples of how much quicker prices are recovering in the capital.

One example yesterday was of a Dublin house which sold at auction for €815,000 -- or 20pc above its €680,000 guide price.

The agents Lisney could have settled for the reserve of €750,000 for Sunnybank, St Martin's Row, Chapelizod, Dublin 20, a three-bedroom period house.

The riverside property near the Phoenix Park was the birthplace of 'Daily Mail' founder Lord Northcliffe. At the peak of the market it might have fetched €2m.

However, some economists, such as Robbie Kelleher of Davy Stockbrokers, consistently forecast that prices have further to fall in Dublin generally.

Mr Kelleher points out that issues such as lack of mortgage funding and further jobs uncertainty do not augur well for the economic outlook.

On the other hand, one Dublin estate agent, Joe McPeake, says that houses in reasonable condition in Dublin 4 and Dublin 6 in the €400,000 to €550,000 price range are in strong demand and that their prices may have increased by between 5pc-8pc since the start of the year.

Even in well-supplied areas such as Tyrellstown in Dublin 15, prices are beginning to show increases -- boosted by demand for rental accommodation.

At an Allsop Space auction last July two terraced houses with four bedrooms at The Boulevard in Tyrellstown sold for €124,000 and €129,000.

Last October, a neighbouring house in poor condition sold for €142,000 in a private sale. More recently, another Boulevard house in walk-in condition sold for €165,000.

While this suggests a 28pc price increase in less than 12 months, Mr McPeake says that the Allsop Space prices last July reflected fire sale markets and, even then, similar Boulevard houses sold privately for more than the auction prices.

He said that prices have not really increased by that much and an increase of 3-5pc might be more accurate.

The differences in pricing comes as more than half of the country's brokers report rising demand for mortgages.

Stronger

Research by the Professional Insurance Brokers Association -- which represents 870 brokers -- shows that 55pc of brokers report stronger demand for mortgages.

The figure was 49pc in the final quarter of last year.

Demand is coming from those who believe property prices are close to the bottom and those who believe that it is cheaper to buy than rent.

Meanwhile, PIBA said KBC Bank, Bank of Ireland and Permanent TSB are most likely to reach some sort of agreement with customers who are in difficulty with their mortgages.

Almost 60pc of brokers say banks are coming to arrangements with customers, while 40pc say they are not.

Rachel Doyle, PIBA chief operations officer, said banks' reluctance to lend is the biggest deterrent, followed by fear among consumers about the economic situation and the future.

"We would encourage the Government and the Central Bank to deal with the banks very firmly and force them to develop a prudent lending policy, they have been given the capital to do so," she said at a meeting in Dublin yesterday.

"This crisis in lending has gone on for far too long."

Irish Independent

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