Wednesday 24 January 2018

The essential new home buyers' guide

Prospects are now brighter for those seeking to buy a new build - but there is still not enough supply

Ken MacDonald, managing director of Hooke & MacDonald
Ken MacDonald, managing director of Hooke & MacDonald
Liadan Hynes

Liadan Hynes

It's a rosier outlook for new home buyers this year than last, with supply beginning to increase as a result of the Help to Buy scheme. However, the number of new developments still falls far short of demand.

With at least nine new homes schemes launching this week, the season has started with plenty of pace. And it looks set to be dominated yet again by the issue of the Government's Help to Buy scheme for first-time buyers.

With the scheme currently under review, there are fears that the Government may end the incentive when Budget 2018 is announced. The knock-on effect may be a rush from buyers to take advantage of it before it disappears. Some agents have suggested that more new homes developments may sell off-plan as launches are brought forward to come to market before the Budget and before their show houses are ready.

The scheme, which was introduced in last year's budget, is due to run until 2019. Critics have blamed the scheme for increasing the pace of house price inflation, particularly in and around Dublin where houses are scarcest.

However, the new homes departments of Hooke & MacDonald, Sherry FitzGerald, and Savills all argue that, in fact, the scheme has led to a much-needed increase in supply. The Help to Buy, they contend, has increased confidence among developers that demand for their completed schemes exists and has resulted in movement on developments that might otherwise not have happened.

"Many of the builders that we're acting for are accelerating their programmes purely as a result of that measure," says Ken MacDonald of Hooke & MacDonald. "So it is increasing supply. I know some commentators are saying it is increasing demand, but the demand is already there. You're not introducing new people that weren't already there before, you're just facilitating their ability to purchase a home."

Since the recovery began, the starter home end of the market has struggled most to regain pace, with stock more plentiful in traditional, established suburbs where the typical first-time buyers were given a financial hand-out by their parents, or where families were trading up.

Ivan Gaine, head of new homes for Sherry FitzGerald, points to the Help to Buy scheme as increasing the ability of this buyer, at the €350,000 end of the market, to purchase.

"Looking at the first eight months of the year, it's been a much more positive year," says Gaine. "And I think it's been positive in that there is more volume across all sectors of the market. I think we've seen hard evidence of the recovery beyond the greater Dublin area. In the first six months of this year, our overall sales are up nearly 40pc but the core first-time buyer with prices under €350,000 has seen an increase of just under 60pc of our transactions."

David Browne, head of new homes for Savills, reports that they have seen three times the amount of sales in new homes since last year, and are selling far more stock at the level of first-time buyers.

While activity is still slow to non-existent around much of the country, Paul Hannon, head of new homes at Sherry FitzGerald Cork, reports that this year they have seen the first fresh-out-of-the-ground schemes since the recession.

At Kinsale Manor, for example, launched at the beginning of this month - the first phase of 27 units selling out immediately, with approximately 800 visitors on the weekend of the launch.

"From a new homes perspective, certainly the Help to Buy scheme has mobilised a lot of first-time buyers," says Hannon. "From a Cork context, we're only now at levels that are really making sense for the developers to go and open up sites, from a viability perspective."

He says the Help to Buy has given developers and financiers confidence that if they go to the market, there will be buyers there, although he estimates Cork is still up to 18-24 months behind Dublin.

According to a recent Sherry FitzGerald survey, the stock of second-hand properties on the market is currently at the lowest level ever recorded by the nationwide estate agent.

Whether the Help to Buy is a hindrance or a help, a shortage of supply continues to be the main issue in the new homes market, with the Housing Agency putting the figure at 30,000 new homes needed each year to 2020 to meet demand, while the CIF puts the figure even higher at 35,000 a year.

"I think the most important factor is that there is a dire shortage of supply in new houses and apartments," says Ken MacDonald.

"While supply has increased, it is still scratching the surface compared to the actual demand. So unless the budget produces significant incentives to stimulate supply in both the sale and rental sectors of the market, the position is only going to deteriorate. The initiatives that are needed have to be radical, effective measures, not just ones that will have a small effect on supply."

On the following pages, our New Homes guide shows that there are many developments coming to completion over the next six months, in and around Dublin and the commuter belt. Even the regional cities are beginning to see movement on sites.

Sunday Independent

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