Property market senses the bottom
But the green shoots are fragile and still depend on credit flow, location and cash-rich ex-pats
Can it be true? Has the property market truly bottomed out? And not only that, but showing some signs of life?
Well yes and no. Very encouraging signs are there for all to see. The newspaper property supplements are less anaemic and signs proclaiming "Sold" which have been as rare as hens' teeth are suddenly being seen in some of the better Dublin enclaves. Agricultural land is making record prices.
And there are tentative signs that if potential buyers can survive a searching examination of their finances -- now so intimate that it would shame a proctologist -- there are mortgages being approved.
Even property auctions, a leit-motif of the halcyon days of the boom, are making a re-appearance after a five-year absence.
While there are huge tracts of the country where the residential property market is still on life support there are at least some signs elsewhere that suggest the patient is out of intensive care.
Recovery has started in Dublin, not all of the capital, but in the areas where there are good family homes near the better schools and with access to good public transport and other infrastructure.
Robert Ganley of auctioneers Knight Frank said there is no doubt that there has been a substantial increase in demand for family homes in good locations.
"There is a big rise in the number of viewings, but more importantly we are actually seeing competition for properties that are currently priced. We are seeing two or three bidders with evidence of funds. These days we would always seek evidence that funds are available and approved. We are seeing competition among people with hard cash and people with loans approved. That's something we haven't seen for five years or so," said Mr Ganley.
He said the family home sector is strong -- particularly in the €400,000 to €800,000 range and that's where competition for good houses in hotting up.
"At the higher end of the market, the €1.5m to €3m range, we are seeing a lot of ex-pats coming back to Ireland and buying. The majority of those deals are being funded by money which has been earned abroad, either in sterling or other denominations. They are coming back for a number of reasons but we have seen that one of the main factors is their desire to educate their children here," he added.
Mr Ganley points out that fees in a good private school or boarding school in Ireland are about €15,000 while a similar school in the UK could have annual fees of £30,000.
"That's a big saving. The other sector which is coming back are those ex-pats who are planning retirement, maybe not now but in five years' time. They are saying 'now is a good time to buy in Ireland, the euro is weak and there is value and the market has bottomed out'," he said.
He believes there is still cash out there held by people who did sell up in the good times and decided to rent.
"They are coming back to buy. Also there are those younger people who have always rented who are now tempted to buy because rents are going up so it's nearly starting to be cheaper to buy," he said.
The increase in the number of auctions is a positive sign.
"We have put a number of properties to auction and plan more in the next few months. It's a sign of better demand.
"In some ways, when you go to auction you do limit your market but, depending on the property, if you do have a number of potential buyers with cash or are mortgage approved then it can be advantageous," he added.
Mr Ganley said they are seeing real interest in good country properties with land that are well priced.
Interest is coming from the UK particularly and from ex-pats coming back from the Americas and the Middle East.
"There's a lot of nonsense spoken about the American market. In essence they are Irish people from America who are buying. There's always an Irish link. An American living in Houston, Texas, doesn't just jump up and decide 'Actually I'm going over to live in Ireland tomorrow.' Either he is Irish or his wife is Irish. There is a connection."
Irish living abroad are helping fuel the recovery in certain segments of the property market.
Analysis of their own sales by Knight Frank shows that -- for the Dublin south residential market this calendar year for sales agreed and sold -- 55 per cent of houses in the €1m to €3m bracket were sold to ex-pats with money earned abroad with no mortgage at the time of purchase. Half of these were UK-based, 25 per cent Europe and 25 per cent from the Middle and Far East.
In the country properties, market this year ranging in price from €400,000 to €2.5m, 46 per cent were bought by UK-based ex-pats, nine per cent by US-based ex-pats and 45 per cent by Irish living in the Republic.
Knight Frank is selling Inish Turk Beg Island in Clew Bay, Co Mayo, which was transformed by the Egyptian-Irish businessman Nadim Sadek, who turned it into a hip super luxury retreat that can accommodate 36 people in a series of houses.
"Anyone could end up buying that. We have had really good international interest. The guide price is €2.85m," said Mr Ganley.
Will Coonan, of Coonan auctioneers, said there is a definite improvement in the Dublin area, specifically Castleknock, Clontarf and south Dublin where asking prices are sometimes being exceeded.
"In the areas 12 to 20 miles from Dublin the demand is also noticeable with certain types of properties becoming easier to sell -- particularly good three or four-bedroom semi-detached and some quality detached houses.
"Prices vary considerably but demand for houses in the €450,000 to €750,000 is quite strong in the city areas and €250,000 to €450,000 outside the city," he added.
He said that in recent months Coonan's has had to put some of the more sought-after family homes to "best and final bids" because of the lack of supply for what the market is demanding.
But getting mortgages continues to plague the market despite the banks' claims about their availability.
"They are available but the slow progress for applications and the continuous questioning of their financial history can often test the patience of many applicants. Mortgage approvals that last for more than 90 days would help purchasers in their hunt for a property and greatly assist purchasers acquiring a new home which has yet to be completed," he said because fitting the viewing process, negotiation and conveyance all within three months is generally not possible.
"Despite the constant talk about ghost estates a shortage of good quality new homes is becoming apparent in the cities and the stronger commuter towns. There has been good demand from first-time buyers to avail of Mortgage Interest Relief and with sales required to be closed prior to December 2012 to avail of that tax relief we have recently had good activity here in Co Kildare in places like at Moyglare Hall, Castlepark and Griffin Rath in Maynooth, The Ryebridge in Kilcock and Hazelwood in Celbridge which is currently sold out," he said.
But Mr Coonan warned that to fund the construction of a new development requires capital from the financial institutions.
"Unless this becomes available developers and builders will simply not have the ability to build the new homes that are required in areas where demand is now apparent.
Simon Ensor of Sherry FitzGerald said that they now have 7,000 potential buyers registered at their offices nationwide -- a return to pre-boom figures.
"An even more interesting fact is that, when we asked them, 4,000 out of the 7,000, claimed they were cash buyers. That is hugely significant. There is no doubt the banks are still being very, very selective about who they approve and for how much. So a market which is not dependent on conventional mortgage lending is very important and very significant."
Mr Ensor said the result is a bit of vibrancy in the market.
"When you are selling a good family home in the right location not only will you have one potential buyer but you would have two or three."
He said there is no doubt that word has filtered back to those people who went into rental accommodation waiting for the market to bottom out that it now appears that point has been reached.
"Not only that but there is definitely an upward nudge in specific sectors," he added.
Another pointer is that people who are actively looking for homes in the well-established areas are seeing it for themselves at viewings.
"Last weekend in Dublin we had a house on open view and we had 56 parties looking at it. That's back to the more traditional market that existed until 2006. The good thing is that people have realised the bottom has been achieved and they are not going to save another 10 per cent by waiting until next year."
"At the more affordable end of the market it is now consistently cheaper to buy and service a mortgage rather than pay rent," Mr Ensor added.