Wednesday 24 January 2018

Galway City: Boomtown has little for first-time buyers

Oranswell, Bushypark, Galway; sold for €375,000
Oranswell, Bushypark, Galway; sold for €375,000

Galway city had an excellent year economically, with increased employment from both multi- nationals and local firms combining with the best tourism season since the crash. The influx of returning emigrants continued, with the prospect of Brexit being the only fly in the ointment.

Prices are up 14pc in the year to date. This matches rises in the greater county area and comes on top of a 10pc rise the previous year. Given current conditions, it looks like prices will increase by another 10pc in 2017 - great for investors but not at all good news for young locals who hope to buy their own home. Many are being pushed to outlying Galway commuter towns such as Tuam.

Galway City has a shortage issue -just like almost any other population centre in Ireland right now - but it is also suffering from its own peculiar planning issues, which are adding to the problem. This bustling city is hemmed in by the sea on one side, by the River Corrib on another and by road plans all round.

"Developers are reluctant to commit themselves to uncertain ground, which is along the planned ring road," says local agent Colm O'Donnellan of O'Donnellan & Joyce. "This is the second ring-road plan for the city; the last one never materialised." Unhelpfully for those hoping for more new homes, the road is mapped to go through lands previously zoned for housing. It could take another eight years to iron this one out.

In the western suburbs, where development might be best expected, there is almost nothing in the pipeline - as factored by the latest city development plan, which is about to be adapted. Through the last 12 months, there were only two significantly sized new-homes schemes launched and both sold rapidly. Réileán, a scheme of three-bed semis and terraces by O'Malley Construction in the east side, brought on 73 homes, while Maoilín, a 100-home scheme by Burkeway Homes on the west side, sold out in the summer, even though the last homes won't be completed until the end of the year. There's not much sign of anything else coming on stream.

Galway City is also the hub for the western seaboard's 'monster auction' circuit and the only hub for stressed property to compete on a scale with Dublin's famous Allsop sessions. O'Donnellan & Joyce sold 346 properties out of 395 (88pc), exceeding last year's 85pc success rate for 280 properties. While the houses sold are located all over the surrounding counties, the synergy has helped sell cheaper city properties and many owner-occupiers now put their homes into this system when selling up. While about 5pc go well over the reserve prices and half sell within 10pc, most of the homes just creak in over the line.

The staple three-bed semi now costs an average of €250,000. The five-bed detached, a big staple of Galway City's outskirts, is now averaging €430,000 and in very short supply to purchase. Types that lagged behind have leapt forward this year, helped by investors - mainly from the county area and outside the city - who are jumping on anything small. So, one-bed apartments leapt up 23pc in the last 12 months.

Galway City industries are booming, particularly medical- supply companies who provide employment locally but also bring in workers from outside Galway and abroad. NUIG has particularly strong links and itself brings in personnel who must rent or purchase in the area.

"Three years ago, a semi might have 10 couples calling in to see it on a one-hour Saturday open viewing. Perhaps one of those might be serious about buying. Today, all of them are serious. The banks have increased their lending but still first-time buyers are competing with cash buyers - almost all investors - who account for most (60pc) of the deals taking place," says O'Donnellan.

Perhaps the saving grace for many hopeful buyers is the backstage presence of the vulture funds who swooped in on property here in the bad times and are still feeding them to market. It is estimated that this could go on for another two or three years before they are finished.

The all-round shortage of property means rents have surged by around 18pc in the year to date, as most landlords scrambled to tie down tenants at higher rates under new two-year rules. It means a lesser increase (5pc to 10pc) can be expected in the coming year.

Returning Irish from the UK coming home to retire or take advantage of stronger employment prospects made up a big part of the local market last year, but Brexit and a considerably weakened pound sterling has kiboshed much of this demand. It means there will be just that little bit extra to acquire for locals in 2017.

Irish Independent

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