Monday 23 October 2017

If you build it, they will come

It's all about first-timers this week, as two new starter schemes launch and the Budget brings in a rebate.

Churchfields in Ashbourne, Co Meath
Churchfields in Ashbourne, Co Meath
Interior of new homes at Alderlie in Adamstown, Co Dublin

Last week's Budget saw the Government introduce a help-to-buy scheme for first-time buyers that will give a tax rebate of 5pc of the purchase value of a new home. The scheme does not apply to homes over €600,000 and homes between €400,000-€600,000 will benefit from a maximum of €20,000. The scheme is backdated to July 19 of this year. However, there has been widespread criticism that the measure will only serve to increase house prices.

"I think it's difficult to see exactly what's going to happen," reflects David Browne, Savills' head of new homes. With supply continuing to outflank demand, he says an increase in prices seems inevitable until this imbalance is resolved. "If you are feeding demand, and if there's no supply, naturally, and from a purely economic point of view, that will increase prices. That's logical.

"We have to get supply in line with demand. It's welcome from a new homes perspective in that it is going to help buyers buy houses," he says of the measure. "I would have a view that prices are going to continue to increase anyway, because of the demographics; we live in a city, there's not enough supply. We've more and more people coming in, rents are continuing to go up. So in the short term, as in 12 months, I would expect prices to increase."

In terms of supply, Ken MacDonald of Hooke & MacDonald reflects that the scheme should prove positive: an increase in buyer demand will give developers a sense of certainty that will encourage an increase in the building of starter homes. "I don't believe it's going to be inflationary on prices... If it was a straight grant that handed over €15,000 or €20,000, that would have an inflationary affect. Whereas the way it's designed, as a tax rebate, is quite clever, and it will be helpful for the market."

Ivan Gaine, head of new homes with Sherry FitzGerald, says the scheme should be seen in context. "I suppose it's the next chapter in the Rebuilding Ireland story. It's not a budget in isolation, but in the context of a much broader plan."

The fact that the rebate is very specific in its scope limits its ability to spark rising prices. "To be fair, it's very targeted," Gaine says, pointing out the numerous qualifications attached, including a need for tax credits, and for both purchasers, in the case of couples, being first-time buyers. "The market is not dominated by the purest of first-time buyers. So it's not available to all and everyone. We have the most robust macro prudential rules, some would say, in the world. So this helps a cohort of buyers to save a deposit. Its target is limited and their borrowing capacity hasn't changed, just their ability to secure a deposit. If we didn't have the caps that we have, you could argue the different arguments but I think it's prudent and it's reacting to the double whammy that we already have, and it will assist, but it is a measure amongst a host of measures, which are trying to revitalise, re-energise the industry."

This weekend sees two FTB home launches in the commuter belt. In reality, it is largely new homes here, rather than those closer to the city centre, that will be relevant to buyers under the new scheme because of their price.

Savills launches Alderlie in Adamstown. This development will eventually comprise of 177 units. The launch brings 57 three- and four-bed homes to the market. All are two-storey units, as this traditional style, rather than the narrower, three-storey unit, is the one that buyers currently prefer. House types include three-beds, mid- and end-of-terrace, semi-detached and detached; and in four-beds, mid- and end-of-terrace. Sizes in three beds start at c106sqm, from €270,000 and, in four beds, c131 sqm, from €345,000. "What's unusual with Adamstown is that the infrastructure has come first. You're not going into a field, building a load of houses and then waiting for the school to be built. The train station is there. The schools are there. It's real," says Browne.

Meanwhile Hooke & MacDonald are launching Churchfields in Meath, within walking distance of Ashbourne's main street. Forty homes come to the market this week, terraced and semi-detached three-beds and semi-detached four-beds. The three-bed terraced units, c108 sqm, are from €272,000. The three-bed semis, c117 sqm, are from €295,000 and the four-bed semis, c136sqm, from €340,000. A larger four-bed costs from €380,000.

Churchfields viewing: Today, 2-4pm Agent: Hooke and MacDonald (01) 631 8402 Price: From €272,000

Alderlie viewing: Today, 1-4pm Agent: Savills (01) 618 1300

Price: From €270,000

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