Help-to-buy scheme boosts new home sales
First-time buyers are feeling the benefits of the Budget, but stock remains low
'New Homes does not do uncertainty," says David Browne, head of New Homes at Savills, reflecting that uncertainty over the Budget saw the season get off to something of a slow start as buyers and builders sat back and waited.
Savills, Hooke & MacDonald and Sherry FitzGerald - the three agents fielding the lion's share of new developments in Dublin and nationwide - agree that the effect of the Budget's first-time buyer scheme has been a positive one, enabling more buyers to come up with a deposit and increasing developers' confidence that there will be more purchasers.
"What we've seen this year is that you have curious buyers who haven't applied for a mortgage yet," says Ivan Gaine, head of New Homes with Sherry FitzGerald. "It's been a long time since we've seen people who weren't ready to go. There was more curiosity this autumn and I think that's the awareness of the help-to-buy initiative. It is mobilising people - they now are in a position to buy, where they might not have had that capacity on the deposit earlier."
As such, it's playing a crucial role in getting the starter home market moving. "If we were talking pre-summer we would have been saying what we've been saying for a while: that that middle market is performing very well, the two professionals with bank of mum and dad. It's broader than that now," reveals Gaine, adding that many of their first-time buyer developments had a better autumn season than spring.
In response to criticism of the measures, he points out that you cannot look at the Budget's measures in isolation from the Central Bank rules.
"It counters the deposit requirements, assists on that, but your lending caps are your lending caps."
Lack of stock continued to be an issue. "It was somewhat frustrating," reflects Ken MacDonald of Hooke & MacDonald, "in that there was very good demand, but there just wasn't the stock there that they required."
This is particularly prevalent in the starter homes market, where more launches that combine value with volume are needed. "The most important market in any property market is the first-time buyer market. Because that affects everything above it," says Browne of Savills, who launched Alderlie at Adamstown recently with 66 sales over a three-week period - predominantly three-bedroom houses from €270,000 up. "We need more of those large volume schemes to move the whole market."
Buyer demand was strong across the board. Sherry FitzGerald's two "biggest and busiest" launches saw good sales from both first-time and trade-up buyers. Hansfield Wood in Dublin 15 launched units from €249,000 and saw approximately 60 sales, while the Marina in Greystones, where units were priced at €485,000 plus, has sales so far of approximately 45 units.
Strong buyer appetites combined with a shortage of stock to create a change in the traditional New Homes season, with strong sales continuing through the summer months and launches still to come. Hooke & MacDonald launched Cúil Dúin in CityWest in mid-June, selling the entire first phase of 46 three- and four-bedroom mainly semi-detached houses, priced from €280,000.
Adamstown saw sales on the October bank holiday weekend, when normally a New Homes site would not open. And Savills have two of their biggest launches next weekend, at a time when the New Homes season would traditionally be winding down.
Apartment sales were strong: Hooke & MacDonald launched New Priory in Dublin 13 in October and all 43 units of the first phase sold on the opening weekend, mainly to first-time buyers. Earlier this year Hooke & MacDonald sold an entire 197-unit block of Cosgrave apartments in Honeypark, south Dublin, to one investor.
"We are seeing investors come back into the market place," reflects Browne, crediting this to recent announcements that rents are continuing to increase over the next 18 months. Savills continued to see strong sales in high-end apartments by trade-up buyers.
Outside Dublin, O'Malley Construction launched Reilean in east Galway and saw sales of approximately 14 units out of 25. Sherry FitzGerald in Cork had two launches, both completions of O'Flynn Construction developments in Kerry Pike and Ballincollig. The latter, Millers Court, sold 13 of its 15 units from plans - three- and four-bedroom semis priced from €310,000, and €350,000 respectively. Mitchell's Court in Kerry Pike launched 14 large detached houses priced from €530,000; four are reserved. They have two upcoming high volume new launches for next season: Clonlara in Kerry Pike from O'Flynn Construction (approximately 140 houses) and Kinsale Manor from Gannon Homes (approximately 136 units).
"It's quite significant in the Cork context because while there's been some smaller infill new developments, the majority of them have been completions of different schemes," says Paul Hannon, head of Sherry FitzGerald's New Homes in Cork.
"It's positive for the right locations. I wouldn't be building a scheme substantially out from the city centre without any infrastructure there."