Monday 21 January 2019

Divided market: Fewer houses within reach of working families as sales of €1m-plus properties on the rise

Most properties exceed €320,000 threshold set by the Government

(Stock photo)
(Stock photo)
Paul Melia

Paul Melia

Sales of €1m-plus properties are on the rise, even as ordinary workers and families struggle to purchase an affordable home.

Under 40pc of new units sold in the capital last year were priced at an 'affordable' level of €320,000 or less, new figures show, a drop on the same period of 2017.

But while affordability remains an issue for many, the number of €1m-plus transactions rose to 825, up 56 compared with 2017.

An analysis of the Property Price Register (PPR) also shows how prices continue to creep up nationally, putting the dream of homeownership beyond the reach of many.

There is a gulf in prices paid for a new home across country. Stock image
There is a gulf in prices paid for a new home across country. Stock image

The 'average' transaction price was €264,634 between January and December 6, 2017. In 2018, the figure stood at €296,336 - an increase of almost €32,000, or 12pc.

For a new home, the average paid was €336,335, up more than €40,000 or 13.6pc, and well above the €320,000 threshold the Government says is 'affordable' if buying in the bigger urban areas.

The figures come as rental costs continue to break new records and as the number of homeless people stands at almost 10,000.

While the Government has committed to delivering affordable homes on State-owned lands over the coming years, the market appears to be building for high earners or those capable of securing financial help to purchase.

Just last week, the deputy chief executive of the largest local authority warned that developers feared that affordable homes would not sell.

Brendan Kenny, of Dublin City Council, told the Irish Independent that builders were "very worried" they won't be able to sell to people struggling to get mortgages.

The Property Price Register records the date, address and price paid for all residential properties, and includes block sales where two or more units are sold in one transaction.

The data relates to the period January 1 to December 2017, and 2018. It shows while the overall number of new home sales is rising, up 13pc to 9,282, many command high prices.

Worryingly, in Galway city and county, some 82 fewer new property transactions were completed this year.

In Wicklow and Limerick, the number rose by just six in each county, and by seven in Cork city and county.

Overall, the number of transactions completed in the first 11 months of last year dropped slightly, down 0.3pc year-on-year, but the value of these deals has increased, reflecting rising property prices. Transactions totalling €14.5bn were completed, up 11.6pc or an increase of more than €1.5bn.

And at the upper end of the market, sales continue to rise.

The number of homes sold for more than €500,000 rose from 4,401 in 2017 to 4,719 last year. Of these, the number of €1m-plus properties trading hands increased from 769 to 825, an increase of 7.3pc.

The register also reveals how in many areas of high demand, affordability remains an enormous issue. Of the 49,182 transactions completed nationally, 13,516 - or 27pc - were above €320,000.

However, in areas where affordability is a real concern for people on average salaries - Dublin, Meath and Kildare as well as the cities of Galway, Cork, Waterford and Limerick - prices for new homes are increasing, although they fell slightly in Wicklow.

Nationally, the average price paid for a new home is €336,335, but outside the Greater Dublin Area and cities the average drops to €189,804 - reflecting the gulf in prices.

Outside of Dublin, the highest 'average' price paid for a new home is in Wicklow at €343,199 (down 1.9pc), followed by Kildare (€305,019, up 8.6pc) and Cork (€296,853, up 25.3pc). But in Dublin, prices are way above these levels.

The average paid for a new home is €436,787, up 13pc on last year. The data suggests developers are not yet pricing homes at what many consider to be 'affordable' prices.

The Government says an 'affordable' new home should cost around €320,000 in the Greater Dublin Area, Cork and Galway, falling to €250,000 across the rest of the country.

However, the PPR register suggest few of these homes are being provided in the capital. Across the Greater Dublin Area, Cork and Galway, some 7,160 new properties traded hands. Of these, 3,697 (51.6pc) were for under €320,000.

In Wicklow, just 53pc are under the threshold, but more choice is available in Kildare, where 62.5pc of new homes are €320,000 or less, and in Meath the figure rises to 85pc.

In Cork, 68.4pc of new homes sold this year are below the threshold, rising to 88pc in Galway.

However, in Dublin - where 4,174 new property transactions took place - just 1,579 (37.8pc) were under €320,000.

In the corresponding period of 2017, there were 3,538 transactions involving new homes, and 50.7pc were under the affordability threshold.

The Government has said the Land Development Agency will deliver 150,000 homes over the next 20 years, largely by utilising sites in public ownership. At least 30pc of any homes built on State lands will have to be affordable, and 10pc allocated for social housing.

Among the first projects to be undertaken by the agency will be the redevelopment of the Central Mental Hospital in Dundrum, south Dublin, which will result in 1,500 homes being delivered with the first available from 2020.

Three other sites in Dublin, with others in Naas, Cork, Mullingar and Galway, will be the first to be developed with more sites to be made available over the coming months.

Irish Independent

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