Slow-down in prices helps stabilise the market
As we approach the end of the first quarter of 2016, a number of trends are emerging. The amount of transactions has been noticeably lower than the same period last year. The prospect of political instability following the inconclusive result of last Friday's election, the looming possibility of a Brexit and the anticipated review of the Central Bank's mortgage-lending criteria, has resulted in an air of caution in the residential sales market with purchasers holding off on transactions in the first quarter. It is anticipated that the slowdown in house-price appreciation, which began last year, will continue in 2016.
According to the CSO, residential property prices were 7.6pc higher in the 12 months to the end of January 2016. This compares to a notably higher level of growth of 15.5pc witnessed 12 months earlier. That said, the slow-down has introduced some stability into the market and created a predictable environment in which to conduct transactions. All participants now know where they stand - buyers are aware of what they can borrow and vendors understand that they may have to normalise their expectations.
The upper end of the market, which tends to be less credit driven, continues to transact well. Research by Knight Frank Ireland has shown that there were 634 transactions in the prime property market in 2015, totalling €840 million. The upper end of the market is made up of a relatively small cohort of potential purchasers.
The demand for prime properties amongst this group is strong, and when such property comes to the market, there are often multiple bidders competing. A number of prime properties that we currently have on the market, for example in Dublin 4, are receiving significant attention from purchasers. Knight Frank has also noticed a strong increase in demand for high-end apartments, penthouses and well- located townhouses.
This increase can be attributed to those interested in downsizing. These individuals are motivated by more than just a desire to move to a more manageable home, they are also interested in unlocking some of the equity that has built up in their homes following significant increases in property prices in 2013 and 2014. It should be noted that the availability of luxury penthouses is very limited within Dublin 2, Dublin 4 and Dublin 6. This has been noted by developers and their advisers, so we should expect to see a number of such high-end niche developments in the near future.
Rena O'Kelly is a director of Knight Frank Residential