independent

Thursday 17 April 2014

Some upmarket vendors cut prices despite upward trend

While the general trend of Dublin house prices may be upward, some vendors have cut their prices since the start of the year. Such cuts are particularly interesting among those Dublin houses priced at close to the €1m threshold which attracts a higher rate of property tax.

With reductions below the €1m mark, this means that the buyers are not alone saving money on the price, but also on the future taxes they will pay on the properties.

However, all the agents questioned about the impact of the tax on the market point out that they have not reduced prices because of the tax and have only done so because the vendors felt a price reduction might attract interest from a wider range of buyers.

From next July the property tax on houses in the €1m plus bracket will be calculated at a rate of 0.18pc on the first €1m and 0.25pc on the balance but it will be charged for only half a year.

Then in 2014, when the first full year's tax will apply, a house which is priced at €1.1m will attract a tax of €1,800 on the first million and a further €250 on the €100,000 over the million mark. So the saving of €250 in a full year is not a huge cost to someone who can afford a €960,000 home.

Gordon Lennox of Sherry FitzGerald points out that those who are buying houses in this bracket are not really concerned about the extra amount of the tax.

"It's like someone who buys a Rolls Royce – if they can afford to buy it they don't worry about the running costs," he adds.

Declan Cassidy of Gunne Residential also believes that the property tax was not a factor among those who recently cut prices. A more important factor may have been a re-think in prices and a realisation that perhaps their previous asking prices were too ambitious in the current market.

"Some adopt a pricing strategy based on the belief that if they set a high price they will be more likely to get offers which are more acceptable. Others set low prices in the belief that this will attract competitive bidding with bids over the asking price," he adds.

Another agent pointed out that sometimes the properties are reduced in price in order to fit in with website searches so a €50,000 price reduction would attract searchers in a different price bracket.

Carmel Coen of Savills says that whatever the reason for reductions in one or two houses, demand is quite strong. "Considering the poor weather and this relatively quiet time in the season, viewings are at healthy levels."

Agents also point out that the number of properties for sale have dropped after the increased buying activity towards the end of 2012 and owner-occupiers are reluctant to sell. Consequently this may push prices upwards.

In the meantime, here are some of the houses which have seen recent price reductions.

Rosbeg, Windgate Road, Baily, Howth, Co Dublin, was priced at €1.25m last year but on January 2 its price was cut and Savills is now asking €975,000. The four-bedroom detached house extends to 186sqm and stands on 0.9 acres. Its Howth site has panoramic views of Dublin Bay.

Across the bay in Dalkey, a five-bedroom detached house of 266sqm at 4 Castle Close has had its price cut from €1.15m to €995,000 – a drop of 13.48pc.

But these cuts below the €1m property tax threshold are quite rare. For instance, Willow Brook, 2 Saval Park, Saval Park Road, Dalkey, has had its price cut from €2.25m. Now Sherry FitzGerald is asking €2.075m for this six-bedroom detached house of 427sqm which is quite energy efficient as it has a BER rating of B3.

Also on the southside, in Blackrock, a five- bedroom detached house of 230sqm, 5 Grove House Gardens, priced at €975,000 last year is now asking €895,000 with DNG.

In Clontarf, Dublin 3, a five-bedroom detached family house of 320sqm, Rosemount at 4 Lawrence Walk, Howth Road, was on sale for €975,000 before Christmas and now Gunne is asking €900,000.

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