Wednesday 25 April 2018

Demand returns for holiday homes - but supply remains low

Lahinch is seeing strong interest from buyers
Lahinch is seeing strong interest from buyers

Ryan Nugent

The holiday home market is heating up again - with houses still going for half of boom prices, but set to rise.

Property experts say that prices are continuously going up - though most holiday homes are still being sold significantly below the €200,000 mark. This is far less than boom-time prices which reached as high as €300,000.

However, the stock of holiday homes is also at an all-time low nationwide - with experts saying that for new holiday homes to come onto the market, prices will have to increase to come in line with rising construction costs.

They also noted that in some cases, former holiday homes are being converted into principal residences due to a shortage of family homes in certain areas.

But there is still demand there for a bolthole near the seaside or in the country, according to members of the Real Estate Alliance (REA)

The holiday home market is buoyant in Galway and Mayo, where properties are priced below €175,000. However, supply is tight. As house prices increase in the Dublin area, enquiries for properties on the west coast increase.

Areas such as Lahinch are also seeing strong interest.

Estate agent Healy Hynes, from Westmeath, said now is the best time to buy, with properties being sold at significantly less than their building price.

"The prices are all heading in the same direction - upwards - though they are still massively below construction level," Mr Hynes said.

"The competition in the market is mainly in the Republic of Ireland and as it stands at the moment, it is a good time to buy with the value that can be got.

"Stock is an issue across the board and there is a tight supply," he added.

"The prices will have to increase to make it economical to build outside of the major urban centres."

However, the impact of the British buyer - for so long a key player in the holiday homes market - has been skewed by the fallout from the Brexit referendum.

Both Donegal and Wexford have been hit by the uncertainty surrounding Brexit and the value of sterling.

Sales from the UK market have dropped by 20pc in the first six months of this year, compared to 2016. That was in the six months just before the Brexit vote was held in the UK.

Speaking to the Irish Independent, Donegal seller Michael McElhinney - whose main business is in Bundoran, Ballyshannon and Killybegs - said UK interest is currently low, and stock is also low.

He said that one bright side was that more people from the Republic are now buying, with prices averaging between €100,000 to €150,000 for three to four bedroom properties.

"Brexit is not positive - we would see our turnover down by 20pc, that is quite significant and is coming from the UK market," Mr McElhinney said.

"This is due to the uncertainly from Brexit and the value of sterling, which is turning UK buyers off.

"Our stock levels are also at an all-time low.

"We would have sold in the region of close to a house and a half each week last year, which would have been 70-75 houses all year.

"So far this year it is down from around 35 to 28 sold.

"Our fees would be significantly down, and that's purely the Brexit effect."

However, the jump in Irish interest is being felt elsewhere, particularly for Limerick estate agent Michael O'Connor.

He said that he has sold more holiday homes in Kilkee, Co Clare, in the past month than he had in the previous five years.

"It is only really starting to rise," he said. "Based on what we've sold it'd be in between €150,000-€170,000," he added.

However, he reiterated that it would cost in the region of €200,000 in order to build new properties to alleviate the low numbers at their disposal.

Irish Independent

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