Property recovery to grow as prices rise in country
URBAN centres across the country will join the property market recovery in earnest in 2014.
One leading estate agency is predicting a 5pc increase in house values in urban areas outside Dublin next year, which will be welcome relief for families who have endured six years of falling prices.
However, prices in the capital will continue to surge -- doing little to curb fears that the market there is overheating.
Shortages of quality family homes will begin to revive the market in towns and cities countrywide including Cork, Galway, Kilkenny, Ennis and Sligo.
It is likely that 2014 will be the first year since the crash in which most homeowners will experience rising rather than falling property prices -- albeit at wildly varying levels.
It is also likely to be the year in which property prices finally stop falling in most rural locations, which are still hardest hit since the crash of 2007 and where prices fell by up to 10pc in 2013.
Some experts are predicting Dublin prices will continue to move upwards at a rate of more than 1pc each month for the coming year.
Douglas Newman Good forecasts a 15pc increase in Dublin prices for next year while Sherry FitzGerald is estimating 14pc -- both citing the absence of a foreseeable solution to the capital's housing shortage as the key reason for continued sustained hikes.
DNG's research department says the total increase in Dublin
for 2013 is likely to stand at 18pc, while Sherry FitzGerald is estimating 14pc.
Both networks were fairly accurate in their predictions for 2013 -- they previously estimated that prices in the capital would increase by 15pc or more this year. Outside of Dublin, Limerick and Waterford will see lesser increases simply because there is a bigger supply surplus left over from the boom years, which saw extensive college-driven development take place in both cities.
Sherry FitzGerald has said the 2014 property market will be "the most normal we've seen in quite a number of years".
Keith Lowe, chief executive of DNG, added: "Property prices in Dublin are rising sharply as there is simply very few houses or apartments on the market for sale and virtually no new housing stock is being constructed to meet buyer demand."
Construction statistics show 2013 is likely to see the lowest numbers of new homes built since records began in 1970.
"The lack of houses being marketed for sale is being exacerbated by the fact of many owners being in deep negative equity and, therefore, they cannot sell up. Still more don't want to sell their properties at this juncture of the property price cycle," Mr Lowe added.
Taoiseach Enda Kenny last week said that 25,000 new homes now need to be built every year to meet growing demand, but industry sources believe we are far from this goal.
And there are problems in re-establishing confidence in the housing market after it has been in freefall for years.
In cities where prices are rising, planned house sales are being postponed because of the likelihood of getting a higher price by holding off.
In contrast, in rural parts potential vendors are postponing because they are unwilling to sell for such low prices.
Mr Lowe also pointed to demographics as a key factor for increased demand for housing. While no new homes are being built, the ESRI asserts that 15,000-20,000 net new households are now being created annually, with a large portion of these wanting to live in the capital.
A little less than 400,000 properties are now rented out, which is more than 25pc above the number let out in 2006.
Mr Lowe added: "If even 5pc of those tenants decided to purchase, this would put significant upward pressure on property prices. Consider that there were just 21,500 properties sold in 2012, with 24,000 sales likely for 2013. This means just over 1pc of all housing stock is changing hands compared with approximately 4pc being sold in the UK market.
"There is now an urgent need for construction not just in Dublin but also in other key urban areas such as Cork and Galway. As an example, in Cork city only 14 new homes have been commenced in the first five months of this year and prices in and around Cork city have now started to increase."
Marian Finnegan, head of research with Sherry FitzGerald, believes that figures to be published early next year will confirm a surge in transactions at the end of 2013.
"Those first-time buyers who want to avail of tax relief on property purchase going forward will have had to get their transactions completed by the end-of-the-year deadline."
However, rising prices are unlikely to reach every county next year. Sligo, Roscommon, Offaly, rural Clare, Cavan, Longford, Leitrim and Laois are among the areas where prices are still believed to be falling.
"We have been seeing some parts of the country with values falling almost as much as Dublin has been rising," added Ms Finnegan.
Mark Keenan Property Editor