Monday 20 October 2014

Semi conscious – the great semi-d census

Mark Keenan analyses the results of an exclusive survey to the Irish Independent, which shows just how fast prices for semis are growing in each and every county

Published 27/06/2014 | 02:30

A typical semi D
The standard modern Semi D is in demand as few were built in the boom
Time taken to sell

THREE bedroom semi detached homes in the Dublin 24 suburb of Tallaght and in County Laois have increased in value by 25pc – or by a full quarter – since the beginning of this year, making them Ireland's fastest appreciating property type, according to a new nationwide survey published exclusively today in the Irish Independent.

In Tallaght the humble three bed semi detached house rose from €160,000 in December to €200,000 at present.

Given its modern day relative scarcity, the bog standard three bed semi detached house – the staple of city family housing for four generations – is currently the most sought after and fought over house type in Ireland today.

And with planners seeking to impose widespread low density development norms, it could also be Ireland's most endangered.

As the house model that most first time buyers have long aspired to as that first step on the ladder, and indeed the one which many existing owners are content to remain living in for life, the three bed semi seems to encapsulate exactly the bare minimum expected by a modern Irish family from a home – three bedrooms, two reception rooms, two bathrooms, a private parking space to the front and a private outdoor space to the rear.

However, given the recent marked shortage of these properties, with few being constructed through the last decade, a shortage has arisen not only in our cities, but also in our towns and the prices of semis have been elevating at speed in almost every county.

In order to become fully "semi conscious", today for the first time we bring you the first REA All Ireland 3 Semi-D Price Census showing the exact price movement of the average humble three bed semi in each and every county throughout the country.

The research for the project was undertaken by the Real Estate Alliance – the estate agency network with one of the most nationwide spreads of operations covering all counties.

So what does REA's semi-d price census tell us?

For its part the rapid upwards price surge for semis in Tallaght is understandable given the size of its population (often compared with Limerick's), the scarcity of the house type for sale and importantly, the impact on demand of the strong community spirit, loyalty to the location and the burning desire of grown up children to buy back there.

"Tallaght, in particular, is reflecting a huge shortage of property on the market, particularly family homes," said Philip Farrell." Rents are also increasing making it cheaper in many cases to buy than rent. Prices are also being influenced by the fact that there was very little property moving in the area a year ago."

But, despite the exceptional price surge, the Tallaght experience is perhaps not that surprising given the obvious local factors at play. "Tallaght, in particular, is reflecting a huge shortage of property on the market, particularly family homes," said Philip Farrell.

"Rents are also increasing, making it cheaper in many cases to buy than rent. Prices are also being influenced by the fact that there was very little property moving in the area a year ago."

Perhaps the real surprise of the 3 Semi Price Census is the news that price increases for three bed semis in the commuter areas around Dublin and in two other main cities – Cork and Galway (rather than the county areas overall shown on the chart) – have actually outstripped those in the capital for the first six months of the year, according to the Real Estate Alliance data.

It is the first time this has happened since the property crash kicked in and a sign that standard homes in other population centres are now experiencing the price surge Dublin first began clocking two years ago.

In the commuter counties, three-bedroomed semis have increased by 15.54pc to an average price of €182,353 in the first six months of the year.

For its purposes the REA network doesn't just include Dublin's neighbouring counties but also counties within driving distance such as Laois and Cavan which showed some of the biggest hikes.

Like Tallaght the Laois three bed semi hiked 25pc in six months while Wexford (20pc), Wicklow (20.7pc) and Cavan (20pc) have all shown sudden surges.

"In the outlying counties there was no market at all before Christmas, now there is a market. That's a big difference and it's what accounts for those percentages," says REA CEO Philip Farrell.

This compares with Dublin city where the average three-bed semi now costs €348,333, an increase of 11.76pc on the December figure of €311,667 and a value jump of €36,666 since the start of the year.

"The shortage of supply of starter homes in the commuter belt and large urban areas such as Cork and Galway is now every bit as challenging as the situation in Dublin," said Farrell. "We are now seeing increases in value in these areas which exceed that of the capital."

The overall increase for Cork County and City was 7.69pc in six months while Galway saw a 11.11pc hike in six months county wide.

But while the values of three bed semis in all county markets now appear to be on the increase, some areas are seeing prices rise much faster than others. At the flat end of our semi detached census were Longford and Monaghan, both of which recorded 0pc price movement since Christmas.

However in these oversupplied and underpopulated counties where prices have fallen extraordinarily hard and ghost estates are more common, the fact that there has been no movement in six months is a plus and likely marks the bottom for semis. Other types however may still be falling in value in these areas.

"We are getting further evidence of a three-tier market in existence, with most urban areas in the rest of the country seeing only half of the growth of the commuter belt with values at an average of €106,345 – that's up 6.57pc in the first six months."

And while 6.57pc is a substantial increase by any standards, housing stocks in remoter rural towns took an unmerciful pounding and it must be remembered that after value falls of 75pc in some cases, they have significantly more ground to make up. The research, which involved 50 REA estate agency operations nationwide also reported a 20pc increase in mortgage-financed sales and a 32pc reduction in selling time for properties since the start of the year.

Overall the survey also confirms the general estimation that three bed semis are most desired nationwide, and thus under the most upwards pressure for values.

It seems the values of semi detached homes are rising about twice as fast as other home types given the REA assessed 19.69pc rise in 3 semi-d values across the country over the past year, while semi prices in Dublin city rose by even more – by 21.16pc – double the rate of all other properties as tabled this week by the CSO.

In areas where there are also four bed and five bed semi types, this obviously cannot continue indefinitely without impacting on prices of larger homes. But in locations like Tallaght, where the vast majority of housing is three bedroomed and semi detached, there can be scope for significant further increases relative to other areas. This is especially true given that Tallaght is still deemed to be relatively affordable to Dublin families while it is also connected to key transport infrastructure like the LUAS.

Other news includes the overall price trend – that the average price of a three-bed semi nationwide is now €170,074 nationally (including Dublin), an increase of €17,018 (11.12pc) on the end-Dec 13 figure of €153,056.

Meantime, the time it is taking to sell a semi has also shrunk since Christmas.

The average property is now taking just nine weeks to sell nationwide, on average nearly 32pc quicker than six months ago, while in Dublin, the time taken to sell has halved from eight weeks at the turn of the year to just four – or one month today. This has also occurred in summer when property activity tends to be slacker.

While there has been a sharp annual rise in the amount of distressed properties being sold on the market (up 32.45pc nationally), most of that growth was in the back end of last year, and the rate of increase this year has slowed to just 7.56pc, showing a return of the private seller in greater numbers.

On the finance front there is hard evidence that the banks are financing house buyers to a greater extent with the amount of cash transactions dropping from an average of 66pc in Dec 13 to 53pc in June 2014.

"In Dublin, mortgage transactions now make up 49pc of all sales, and we are seeing hard evidence that the banks are lending in increasing numbers," said Philip Farrell. This means cash buyers, at 51pc, are still hugely active and a vital component in the inflation that has been resulting.

"But nowhere is the increase in bank lending more keenly felt than in the commuter belt – Cork and Galway – with 55pc of all sales now being financed by mortgages," says Farrell.

Now you're well and truly semi price conscious.

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