Monday 5 December 2016

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Limerick City Centre: Late to the party but City up 9pc

Published 23/01/2016 | 02:30

Kilkerrin, Clancy Strand's, Ennis Road, Limerick, Co Limerick. Sold for €535,000.
Kilkerrin, Clancy Strand's, Ennis Road, Limerick, Co Limerick. Sold for €535,000.

Limerick City centre prices jumped by 9pc on average through the last 12 months to date, coming on top of a 12pc boost the previous year.

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But this was well exceeded in the apartment market which had previously languished badly during the crash. Two-beds moved from €45,000 to €60,000 in the year with cash buyers, including investors, making up around half of all property purchases.

Receiverships and bank sales are now down to around a quarter of properties sold at the lower end in a market which began its recovery later than most.

At the family home end, there has been a notable increase in foreign-based purchasers, mostly ex-pats, buying back into the market with properties now selling as far afield as Australia. Returning families are accounting for as much as 5pc of purchases. Supply of family homes has become an issue. Last year one or two parties on average chased a family abode. Today five parties is not uncommon.

"To be honest we can't see where the required supply of family homes is going to come from. The situation can only get worse. Only one new home site is underway in Limerick and developers are saying that it still won't pay them to build."

A surge in employment has also had a big impact on demand for homes on both the rental and sales end. Among the big employers to land recently is Regeneron which took over the old Dell facility and is planning to have 500-plus on the payroll by the end of 2016. Uber has just opened in the city centre and has increased its plans for a workforce of 300 to 400. There are expansions planned at Johnson and Johnson and at Vistacom.

Amidst limited supply, rents have shot up by 20pc with a home that cost €700 per month a year ago now taking €900. Rents are expected to rise by another 10pc in the year ahead.

The solid price increases of the previous year have brought more homes to market over the last 12 months with stock offered for sale up by 35pc. Even so supply is at about 60pc of what is considered "normal".

At the top end there was "unprecedented demand" for large detached period homes on the North Circular Road and on the Ennis Road. Irish ex-pats based abroad or coming home competed with newly enriched and confident local entrepreneurs and multi-national executives for properties which did become available.

For some of the cheapest space in the country, we can look to the largest of the elegant city centre Georgian-era terraces. Larger versions have languished in disrepair and are likely to continue to do so while the cost of renovation remains so high.

However. mid- and smaller-sized versions are beginning to entice families. This accounts for a 17pc hike (by €30,000 on average) through the last 12 months from €180,000 to around €210,000. With supply of all types of good sized prestige homes in tight supply, the coming year is likely to see them add 10pc.

Cash buyers are expected to peter out as the year progresses, with 7pc inflation likely. Average family homes are likely to add 8pc - fuelled again by increased employment and shortage. Most demand is expected for the top end abodes on the Ennis, North and South Circular Roads.

Irish Independent

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