Wednesday 21 February 2018

Read deal: the business of property by Philip Farrell

PILGRIMAGE: The annual Ploughing Championships are an invaluable networking event for the property industry
PILGRIMAGE: The annual Ploughing Championships are an invaluable networking event for the property industry

Philip Farrell

The mercury in the thermometer that is the Irish housing market rose another degree or two this week as two different sets of figures were released in relation to planning permissions granted nationally in Q2 and average rents to the end of June 2016.

In Q2, according to the CSO, planning permission was granted for just 3,141 homes which is up on last year's figure, however, it's still not within an ass's roar of what is required. The annual requirement of new homes nationally, including one-off houses, is estimated to be 25,000 units per year. If you take into account the pent-up demand that comes from a lack of construction in recent years, then the actual figure required is closer to 35,000.

As Minister Simon Coveney outlined this week, it'll be next year before we start to see positive numbers coming through in relation to the delivery of new social and private housing. As the 'Rebuilding Ireland' project was initiated only in July, many of the proposed units are still at design and pre-planning stage.

The second set of figures, the RTB Quarterly Index, which was compiled by the ESRI, confirmed that 22,103 tenancies commenced nationally in Q2 of 2016. These figures are accurate as they reflect actual rents that tenants paid. Of most concern is the stat that shows average rental prices for Dublin are now 3.9pc higher than they were in 2007. In the first quarter of 2016, average rents were flat but in Q2 they increased by a head-turning 4.5pc which is a very substantial figure for one quarter.

With statistics showing that the numbers of rental properties coming to market is reducing every month, rents will only continue to rise. Census 2016 also highlighted the fact that our population is growing at a faster rate than the total national housing stock. Figures for rent outside Dublin are still 11.2pc behind the 2007 peak. The gap between Dublin and the rest of the country continues to grow.

FTBs and the Budget

Budget 2017 is looming. And by now submissions have been made by all parties with a vested interest in the housing sector and many first-time buyers are no doubt waiting with bated breath for Michael Noonan to wave his magic wand and provide assistance in overcoming the barriers to entry that currently exist. While many might have difficulty picturing the Finance Minister as a fairy godmother, I would imagine FTBs will take assistance no matter how it is delivered.

When Housing Ireland was announced in July, Minister Coveney confirmed that an announcement would be forthcoming in Budget 2016, backdated to July, which would provide an incentive for FTBs.

To make it of real assistance it would need to be worth up to €10,000 which would equate to over 3pc of a property valued at €300,000. This seems to be the point of most resistance in the Dublin area where supply is limited but finance is even more limited.

How this incentive will be provided is of real importance. Will it be in the form of a tax credit and drip fed to the buyer or, better still, a reduction in the rate of VAT from 13.5pc to 9pc, similar to the successful incentive experienced by the hospitality sector some years ago? The danger with the latter is that the prices of FTB's homes will simply increase by the reduced VAT amount, therefore the former is more likely. Let's hope, whatever form is decided upon, that there will actually be houses for people to buy.

Ploughing on

Following on from the Listowel races last week, all roads lead to Tullamore next week for the National Ploughing Championships, now in its new home in Creggan, Tullamore, Co Offaly. The largest outdoor farm and machinery show of its type in Europe, this event is now one of our national treasures.

Last year there were 285,000 attendees with 1,500 exhibitors. Where there are animals, there is land and, where there is land, there are property experts. A number of property-related bodies will have stands at next week's event including the Society of Chartered Surveyors Ireland, Ordinance Survey Ireland, CSO, and nationwide property group DNG.

Most land agents clear a space in their diaries to attend because the Ploughing Championships are an invaluable networking event.

Land sales have being going through a fallow period over the last nine months. Shortage of land for sale is an ongoing issue. Other challenges in the market have been the historically low milk prices (around 20 cents a litre) and the pressure on world grain prices. According to land specialist John Dawson, who is based in Tullow, Co Carlow, and has been selling land for 50 years, the outlook for the autumn selling season is reasonably positive with lack of supply of stock continuing to be a factor.

"2015 was a strong performing year," he says. "However, 2016 to date has been somewhat flat with reduced farm incomes a negative as a result of reduced prices for commodities internationally." He is finding that "prices for quality arable land in Leinster are achieving €10,000-€12,000 per acre with quality grasslands securing €8,000-10,000 per acre. The strongest demand is for smaller parcels of farming land with the likely purchase in many cases to be local."

No doubt the market will be discussed forensically over the three days.

Last call for awards

It's last call for the INM Property Excellence Awards with the closing date for entries next Thursday, September 23. The 11 awards cover all sectors of the property industry, including design, agency, planning, conservation, public bodies and community, judged by independent experts from across the industry.

Last year's inaugural event proved very popular, with over 750 attendees enjoying a dinner and knees-up as the winners were announced. The overall award went to Stephen McCarthy of Space Property Group. This year the awards will be announced at a ceremony on November 16 in the Dublin Convention Centre - and it promises to be a night to remember.

Sunday Independent

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