Move on buy-to-let properties will boost second-hand market
THE move to speed up repossession of residential investment properties – or RIPs – could help solve the shortage of second-hand homes.
While increased supply of repossessed properties may dampen prices in some towns around the country, it is not expected to reverse the upward pressure in the more sought after areas, especially in Dublin, Cork and Galway. At least one observer believes the imbalance between supply and demand is so strong that prices will continue to rise.
Keith Lowe, managing director of estate agents DNG, forecasts that prices in Dublin could still rise by between 5 and 10pc this year and increases could be seen in Cork, Galway and Sligo.
Towards the end of last year, there were fears that the end of mortgage interest tax relief might stamp out the green shoots that were beginning to appear in the market. But those fears were not realised.
One of the reasons for the increased sales is because buyers recognise how much prices have already fallen.
Mr Lowe also dismisses concerns of the effect repossessions would have on the apartment market. He points out that around the country "you can now buy apartments in places for less than €45,000".
A key factor in the shortage of supply has been the low number of new homes being built. "ESRI estimates that 15,000 to 20,000 new families are being formed every year but we are building less than 7,000 new homes. So these new families have to buy second hand," Mr Lowe says.
While repossessions may force many investors out of the market, others are waiting to take their place.
A key motivator for them is that if they buy before the end of the year they can avoid the 33pc capital gains tax.
Receivers who are appointed to repossessed properties may not be in a hurry to dump them in fire sales in market black spots.