Houses snapped up as prices plummet
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Some developers are slashing prices in a desperate bid to sell off their remaining housing stock.
Castle Manor Homes has cut prices by more than a third at the Belvedere Hills estate in Mullingar, Co Westmeath.
Having sold just 50pc of the units at the original €320,000 asking price up to two weeks ago, the developer brought prices down to €200,000.
The move produced startling results, with sales agreed for the 10 remaining houses on the first day.
Auctioneer Aidan Davitt of Sherry Fitztgerald Davitt and Davitt said the increase in interest had been overwhelming.
"It's been extremely effective," he said. "We had 10 houses to sell and now we have deposits on the 10 of them.
"We knew cutting the price would be a help to us but we thought it would at least take a couple of weekends."
Developer Area Building has also opted to go down the price-cutting route and has taken even more dramatic action.
It cut the €1.4m price tag in half on its five-bedroom luxury homes in Lynnwood in Ballycoughal, Co Dublin, earlier this week and is hoping for similar results attained by Castle Manor Homes.
Economists predict that Ireland will require around 50,000 new homes a year up until 2016, but recent years have seen an annual housing output of up to 90,000.
Reluctant
Such an over-supply during a period of economic prosperity largely went unnoticed, but a period of under-building will now get under way, with most developers reluctant to launch new projects until existing stock sells.
Economic consultants DKM predict housing output will be 20,000-25,000 units for each of the next three years as the market naturally corrects itself.
"What you'd expect is that the gap between houses built and sold has to reduce over time," DKM director Annette Hughes told the Irish Independent.
"We're now going to under-build for a couple of years to correct it. It's a typical cycle."
Ms Hughes said a range of factors contributed to the over development, including botched rezoning by Government.
"The economy, people having more employment, income and confidence, a perception that you needed to own your own home, the fact that more people came here to work; we had to deal with rental demand etc, so we had to build a lot of units," Ms Hughes added.
"One of the issues responsible was that the government in the late nineties brought in the service land initiative, which was opening up land for the development of residential housing.
"It gave a significant amount of funding for that but it didn't prioritise where that funding should go. So it gave a blanket amount of funding to local authorities right across the country.
"Consequently, you had a significant amount of development in locations where you otherwise would not have had developments," she said.
- Stephen O'Farrell and Caitrina Cody
