Tipperary North: Starter homes soar in North Tipp
Eastern Europeans who have amassed deposits from years of careful savings are among the first-time buyers competing for a limited number of three-bed semi- detached homes in north Co Tipperary.
Prices for a three-bed semi - the most popular house type last year - soared 22pc to €150,000, with growth likely to slow to 13pc, to €170,000, by the end of this year.
In one Nama estate in Nenagh, almost 80pc of the three-bed houses that were finished off by a new developer were sold to Eastern Europeans, according to local estate agent Eoin Dillion of REA Dillon.
"These are couples have been renting for five or 10 years and now that rents are at €800 or €900 a month, they want to buy and reckon their outgoings would fall to €500 if they had a mortgage," Dillon says.
"A lot of these couples have saved between €50,000 and €60,000 for a deposit, sometimes by each working two jobs, one by day and one at night. Eastern Europeans prefer brand new houses."
Such new builds are, however, few and far between in the north Tipperary property market at the moment. In the Millers Brook estate in Nenagh, prices for a three-bed semi peaked at €240,000 in 2007 and were selling for as low as €100,000 during the crash. They are now selling for €150,000, or €90,000 less than at their height. Such patterns suggest to Dillon that the figures do not yet stack up for fresh development in the region.
"No builder will build new three-bed semis for a sale price of €150,000 - they'd have to get €200,000 just to break even," Dillon says.
"I don't see any new builds breaking ground in 2018 and it could possibly be 2019 and 2020 before that starts to happen and to dampen price increase."
Supply has also been very heavily constricted in Nenagh - one of the most in-demand locations in the region. And there will be a requirement for plenty of homes thanks to plans by First Data, the American payments processor, to create a research and development centre in the town and create up to 300 jobs, Dillon says. "It's turned out to be a negative thing for supply because a lot of vendors wanted to wait until First Data actually arrived before selling, in the hope of getting a better price."
Counterintuitively, demand will also likely be shored up by purchases by some of the 250 staff being made redundant at the former Procter & Gamble plant in Nenagh, which is being shut by its new owner, Coty - the maker of Max Factor and Rimmel cosmetics. These might be in favour of investing a lump sum.
"You'd expect that a couple of hundred thousand euro in redundancies would create a short-term surge in demand for investment properties like three- and four-bed semis," Dillon says. "That might create a short-term bounce in prices in 2018."