Dublin 1: D1 owner-occupiers now outbidding investors
THE owner-occupier is back with a bang in Dublin 1 after a period in which investors dominated purchases in a market heavily loaded with apartments, smaller homes and large older terrace buildings. Whereas in both 2016 and early 2017, 70pc of sales in the city-centre postcode were to investors buying with cash, that figure had reduced to 50pc by the end of last year, with the remaining half of transactions being sales to buyers intending to live in the property that they purchased.
This is a very mixed market which combines still-rundown areas with some of the most sought-after locations in the central Dublin area. On one hand, there are the gleaming apartment blocks in the now thriving IFSC area (until midway through the boom, it had been busy by day but struggling to stay lively after dark).
Owner-occupiers are now starting to outbid investors - motivated by a desire to get out of the rental market - and these have been helped in that quest by the introduction of rent caps, which has also put a defined ceiling on the price that investors are now willing to pay for properties to let out.
Local agent Owen Reilly, who largely deals in modern Docklands properties, says prices rose by far more through the last 12 months than he had been expecting. "The main reason for this was the lack of supply. In 2017, listings were down 13pc on 2016, and values were up by a similar percentage. The first six months of 2017 saw prices in Dublin 1 rising by an average of 1.5pc a month. This slowed to 0.5pc in July, and to 0.4pc in November. This slowing in the rate of inflation is down to affordability, which is going to be more of a factor in 2018. So the market is starting to level off and to regulate itself."
Reilly also noticed a change in the typical breed of investor buying in Dublin 1.
"In previous years, investor buying was driven by opportunism and the hunt for a bargain," he says. "But in 2017 we saw many more investors buying through their pension. They are not as obsessed with a low purchase price as they used to be, and are thinking more long-term. We also started to see investors introduce debt, even though they were in a position to pay cash."
Having seen price inflation of over 12pc in the year to date, Reilly predicts that there will be more modest growth in Dublin 1 in 2018, in the order of 5-7pc (7pc up to €350,000 and 5pc above that figure) and that there will continue to be more owner- occupiers than investors. He says that he is not aware of any new apartments built and completed in 2017, nor of any due to be completed in 2018 (the Dublin Landings scheme is not due to be launched until 2019). He also points out that in his view apartments are still selling well below their development cost.
"Dublin 1 will continue to be attractive to owner-occupiers who are prepared to sacrifice the garden and the car in the suburbs as a trade-off against the convenience of being able to walk into town, and lower monthly outgoings in terms of travel costs. It's a lifestyle decision."
While modern apartments and compact older homes are popular, once you move out into side streets, there is a motley jumble of older commercial buildings struggling to keep tenants at shop level and with floors in poor condition overhead - or of 'pre-63s', which are also rundown but starting to feel a new demand coming on from improvements which include the Luas to Grangegorman.
The pre-63s represent some of the cheapest central residential space per square foot of any Dublin location. It is likely to be some years yet before these blighted spots, often located in high-poverty areas, see their fortunes lifted substantially.