The role of the squeezed middle in the stock shortage
In the course of our general agency work we encounter a wide range of issues that people are facing which dictates how and when they move. We meet many older people, for whom the family home has grown too large. These empty nesters are keen to trade down to a more manageable home or apartment. Launch any apartment in excess of 100sqm on the market in south Dublin, price it correctly and watch the level of interest it generates. It's the same phenomenon with well-located townhouses.
Most of these properties are bought with cash and the buyers are not dependent on the sale to make the move. These purchases tend to be funded with savings or investments put aside for retirement. Once the move has taken place, the family home is brought to the market and sold. This has been the normal practice over the years with people trading down when retirement looms. A large number of clients are keen to sell up and trade down once they find the right property and therein lies the problem ... lack of supply.
According to a recent Daft.ie report, the number of homes for sale has hit a nine-year low. So where have the houses gone?
Clients we meet are trading down from large family homes and are keen to secure manageable homes close to Dart or Luas lines within walking distances of local amenities in mature areas, close to where they have lived all their lives. Many of the homes they are likely to buy are occupied by those in their late thirties or early forties who bought their homes over the course of the Celtic Tiger years.
While these potential sellers have out-grown their homes and would relish the prospect of moving to larger ones, many are out of negative equity but only just, with little or no equity in their homes to help them trade up. The Central Bank guidelines dictate that 20pc LTV is required and this for many is a bridge too far.
Many potential sellers in the middle of the market are paying mortgages, raising families and trying to save a deposit - which takes time - to trade up. These are the people who need to be encouraged to move so as to free up stock for both those trading down and those looking to get on the ladder.
The Central Bank has indicated that the new lending rules have served their purpose and cooled the market. However, for many, they have impinged on their ability to trade up or down.
I hope that when the rules are reviewed that it helps to normalise the market. More ability to move in the mid-section of the market should see movement across all price points.
Ivan Tuite is an associate director at Lansdowne Partnership