We must learn to do property in moderation
It looks like we are going to have to stomach the return of construction and property developers in a big way, says Brendan O'Connor
THERE is a phenomenon around certain parts of Dublin at the moment whereby properties come up for sale and all these young and not-so-young families come and view them. These are the lucky ones, who maybe have mortgage approval. So all these hopeful families cram in and view these properties and get ready to bid. But increasingly, before they even get to consider their bid, they are told there is already a cash bid in for the asking price. Before they have a chance to take this in, the property has gone maybe 10 per cent or more over the asking price and they are being told there is no point in getting involved unless they have cash and can move straight away. Even if they do have cash and get involved, as soon as they put a bid in, a counterbid zaps straight back at them. Even if they have the cash and the balls to go a bit further, every bid they make is bettered, instantly. Sometimes, a slightly more humane estate agent will even tell them not to bother bidding anymore because there is no point. And within weeks the house is sold, for cash.
These are the mechanics of the property bubble that has seen property jump over 20 per cent in parts of south Dublin in the past year. It is almost as if there is a class of invisible people who have moved in and are hoovering up property. Follow up on some of these properties and you discover they are not going to be lived in but maybe put out for corporate lets or the booming rental market.
The prices seem daft, so people started deciding to sit it out, and wait for this effervescence to die out. Talk to people and they would tell you authoritatively that there has to be a finite number of these cash buyers around. How many cash rich old people can there be? But recently people realised that it is more complex than that. It's not all just old people with cash that they would have put in bank shares back in the good old days. The property market in affluent areas is being driven by a huge amount of investors of all hues. Because good property in the right area is seen as a solid, tax-free, one-way bet for a guy with cash to store. After all, you'd hardly be putting it in the bank would you?