Tuesday 27 September 2016

Paul Melia: Number of bulk buys has soared over six years

Published 25/04/2016 | 02:30

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More than 280 homes are being bought every month by property funds as cash-rich investors continue to snap up much-needed homes.

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An analysis of the Property Price Register shows that 777 houses and apartments were sold in the first 10 weeks of this year for almost €140m as families struggle to buy or rent a property.

The data, analysed by the Independent.ie data science team, shows there has been a continuous rise in purchases by investors since 2010.

That year, 194 homes were bought at a value of €71m. The number sold has continued to rise every year since – 315 in 2011, 614 the following year, 1,749 in 2013, 2,392 in 2014 and 2,935 in 2015.

In all, a total of €1.906bn has been spent. The record year was 2014, when a massive €666m was invested in Irish residential property.

In total, 296 transactions of ten or more units were completed. Many of the units were in unfinished housing developments or apartment blocks, meaning they required substantial investment to complete them.

However, the register shows that some homes have been snapped up for as little as €6,000 each, and that the average price paid remains far lower than what houses cost on the open market.

In 2014, when the Government published Construction 2020 and the Social Housing Investment Programme which set out measures to boost supply of houses for the social and affordable sectors, the average price paid for a unit was just over €278,757.

However, the following year – when local authorities had secured additional funding and were free to buy units coming onto the market – the average price paid dropped to €180,000.

On the basis of the funding available, some 2,500 units could have been secured.

The Department of the Environment said that 1,000 homes were bought by local authorities in 2015, but hundreds of homes are under construction.

The data suggests that investors continue to see Ireland as a sound investment opportunity, and that despite the lack

of new homes coming onto the market, properties are still available.

Sources suggest the State is not in a position to compete with investor funds for these units.

A number of reasons have been cited – a requirement to secure approval from the Department of the Environment for sales costing €2m or more, or for more than 15 units, which can take too much time when the units are being sold in a tight timeframe.

In addition, local authorities are reluctant to purchase blocks of apartments where sitting tenants are in place, even if there are empty units which would be suitable for social housing.

Irish Independent

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