2013 - The year of two markets
Mark Keenan on why this year was one of surging prices in the capital, while prices remained stagnant in rural country areas
THIS year will be remembered as the year of two property markets. Ireland's cities, led by Dublin, saw improving prices build at pace to the degree that by the third quarter, the CSO had prices in the capital rising at just over 1pc per month -- even despite a continued squeeze in mortgage lending by the banks.
The third-quarter report from the CSO showed that Dublin prices had increased year on year by 12.2pc but had shot up by an unprecedented 3.9pc in September alone.
When apartments were removed from the equation, Dublin houses were up 4.2pc in four weeks -- to put it in context, that's a value hike of more than €12,000 on a €300,000 property. Most estate agents estimated that Dublin price hikes would exceed 15pc by year's end.
Dublin's prices were deemed to be "moderately unaffordable" by the Demographia International Housing Affordability Study 2013.
The wholly unexpected return of boom-era house-price inflation in Dublin led to a growing concern over the pace of increasing Dublin prices, which have been fuelled largely by a shortage of family homes.
This, in turn, sparked a debate about whether direct action would be required. Among those in favour were the construction industry and UCD's Colm McCarthy.
However, Finance Minister Michael Noonan and Housing Minister Jan O'Sullivan played down the issue with the former, stating that prices had fallen by 50pc already while the latter was indicating there was more than enough land rezoned.
The construction industry countered, saying that much of the existing zoned land was embroiled in financial complications and that too much of it had permission for apartments when houses were in demand.
The debate is likely to continue into the new year along with house-price inflation in the capital.
Cork city prices continued to strengthen, albeit not at the same breakneck pace -- along with those in parts of Galway and Limerick cities. Waterford has also been experiencing an increase in sales activity with agents reporting a brisk step-up in business there.
In stark contrast to the cities, markets in most rural and regional locations -- accounting for almost two-thirds of homes nationally -- remained flat, with some even seeing property prices continuing to decline.
As we head into 2014, experts see this two-stream contrast as being normal given that Ireland's property crash originally started in Dublin -- its roots can be found in the stalled top-end Dublin 4 auctions held in mid-2006 -- but it took almost three years to reach other parts of the country.
While Dublin saw its biggest devaluations happening in 2007 and 2008, Co Galway saw prices falling by just 10pc in 2008 but values there shed almost 50pc in 2009. Similarly, Kerry saw most of its value losses (around 33pc) happening in 2009.
It would be natural therefore to assume that more rural counties, particularly those which were saturated with boom-era development, will take more time to work their way out of the downturn.
Thus, the big question for 2014 will be whether the recovery in the Irish property market will spread beyond the cities through the next 12 months, or whether this process is likely to take a few more years. There are already signs of recovery in commuter counties and significant cities like Waterford and Kilkenny.
Through the year, the "monster" Allsop Space auctions continued to play a major role in disposing of homes in large numbers. The sessions got bigger and bigger through the year with the last, held earlier this month, becoming Ireland's largest ever property sales bout, with property assets worth more than €24m being disposed of before a crowd of more than 1,000 registered buyers.
These sales helped unblock the market while also laying down real valuations via disclosed reserves and public sales prices.
In the year ahead, these auctions are likely to play a bigger role in rural Ireland as the supply of city properties for this process continues to dry up.
One factor which will aid the recovery in rural counties is the continued Government-led progress on the issue of ghost estates and oversupply. More than 500 ghost estates were resolved in 2013, most in rural locations, being sorted out. Late in the year, demolition began at the ghost estate element of the notorious Glenatore Estate in Athlone where a two-year-old boy had died tragically the previous year.
Meantime, the rental market in 2013 reflected the sales market, albeit to a lesser degree. Last week, the Private Residential Tenancies Board (PRTB) quarterly rent index revealed that Dublin rents had increased by 6.4pc in the year to and including Q3 while they had fallen by 0.2pc in all other areas.
TWO MARKETS . . . A TALE OF THE TOWN HOUSE AND THE COUNTRY HOUSE
FROM SHREWSBURY ROAD TO ABBEVILLE, MARK KEENAN LOOKS AT THE SIGNIFICANT SALES WHICH SPREAD FROM D4 TO THE SOUTH COUNTY AND INTO THE TOP END OF COUNTRY ESTATES MARKET
2013 was also the year that the trophy home began to sell again, albeit at a fraction of the prices achieved during the heady years of the boom.
The successful marketing of homes in Dublin 4 which began in 2012 continued through 2013, with prices over €2m becoming typical and higher sales prices achieved. It was a consolation tonic for owners who saw 70pc-plus wiped off the values since the crash kicked in.
Most notably, we saw the sale of the infamous Walford on Shrewsbury Road -- forever remembered as the property that symbolised the crazy excess of the boom when it changed hands in 2005 for €58m. Having then been purchased by Sean Dunne and Gayle Killilea, Walford, now in a run-down state, was sold off market for a vastly reduced €14m. The identity of the buyer has not yet emerged. The property had been on the market for a number of years, so the sale was significant.
Meantime, in one of the higher grossing deals of the year, number 21 Shrewsbury Road sold for €4.75m in an off-market deal. Former 'Dragons' Den' star Niall O'Farrell followed the sale of his magnificent Thorndene home with that of his postponed second D4 project -- a run-down home at 28 Shrewsbury Road. The dapper entrepreneur dropped €5m when he called himself 'out' of 28 Shrewsbury Road for €2.4m -- way below the €7m he is said to have paid for it in 2005 and representing a loss of €4.6m.
However, sales continued and the new confidence spread outwards, with the result that 2013 also saw trophy-home vendors return to the market in Dalkey/Killiney -- the "rock broker" belt where no one had dared dip their toes in the water in five years.
Hitherto, the twin peaks had been frozen since 2007. Among the properties placed for sale was the landmark Sorrento House, the property which originally heralded the start of the boom in 1998 when it sold for €7.5m. A London-based agency has now placed it on the market, seeking offers in the region of €12m.
There was even a return, on occasion, to the old- fashioned single property auction. Last month, Ganly Walters sold Hendre, a large detached contemporary home at St George's Avenue in Killiney, at auction for €2.2m.
Meantime some properties even added substantially to their asking prices in this enclave. A late sale in the year was that of Ashurst, the former home of archbishop McQuaid at Killiney changed hands for €4m after being launched to market by Savills for €3.5m during the summer. In the surrounding posh enclaves of Foxrock and Blackrock, postponed vendors also brought their properties to market in numbers once again. In January, Glenvar, a detached home at Cross Avenue in Blackrock, changed hands off-market for €5.25m, and in April, agent Daphne Kaye disposed of Gortanor, a period home on four acres at Brighton Road in Foxrock for a very respectable €5.05m.
The confidence also spread to north Wicklow, and Enniskerry saw two significant sales taking place -- the disposal of Bushy Park, a detached period home on land which changed hands for €5.85m off-market and the sale of Grattan House by Sherry FitzGerald for €3.8m. A flood of foreign interest was also responsible for kick-starting the country estates market, mostly at the top end.
After more than a year on the market, Abbeville, the famous 14-bedroom Gandon-designed home of former Taoiseach Charles Haughey with 250 acres at Kinsealy was sold to a Japanese businessman by Sherry FitzGerald for €5.5m. The sale price represented a fraction of the €45m for which the Haughey family originally sold the house and estate in 2004 to the Manor Park home building firm. It was first offered for sale by the receivers for €7.5m.
Because of its Dublin location, run-down Abbeville marked an exception to the country house rule of 2013 which saw only properties in walk-in condition considered by overseas buyers.
The trend for overseas trophy-home hunters was started last year by the likes of American billionaire Jim Thompson of Crown Worldwide, who came to Ireland last year to research his family roots and ended up buying Woodhouse in Stradbally, Co Waterford, for €6.4m.
Where native buyers accounted for 80pc of top-end sales in the country estate market in 2007, they made up only 10pc in 2013.
Charles Noell, the founder of Baltimore-based JMI Equity, was pipped to the €5m post at the Ganly Walters auction in January for the deeds of Dowth Hall in Co Meath, which was built in 1760. But he recovered quickly to acquire the deeds of Ardbraccan, an 18th-Century estate house in Co Meath that was sold later in the year by Savills for a similar amount.