Statistics conceal the real state of the market
When asked to give a view of the property market I pondered as to how my words of wisdom would differ from previous luminaries who have graced this page.
'The housing market' is a much maligned term and from an agent's point of view the 'one blanket covers all' concept is exceptionally frustrating and gives a lopsided view of the actual state of the market. Earlier this week it was reported that the ESRI stated that "house prices had over-corrected" - another blanket statement treating all houses as equal regardless of location. When modern housing can be purchased throughout rural Ireland at less than build cost this statement is hard to accept.
Commentators indicate that house prices are rising continuously month by month, however, properties in some of Ireland's most upmarket locations are selling for less this year than they were 12 months ago. Changing property values are not uniform throughout Dublin, with significant increases in value taking place in south county Dublin. Residential property transactions for H1 2016 were down 8.2pc compared to the same period last year with the fall particularly noticeable in Dublin where sales fell by more than 1,000 units from 7,512 to 6,508 - a drop of 13.4pc.
The value of most rural residential properties on a county by county basis generally increased, albeit from a very low base. When reports are published saying "the market is up 10pc" this only applies to starter homes and in reality the upper end of the market is at best tricky. The impact of Brexit created nervousness and uncertainty which is impacting on confidence. We live in hope of a mass exodus of disaffected Democrats following the American election! That, with the UK having another referendum resulting in a decision to remain in the EU, is the ideal scenario for 2017.
The well-publicised shortage of suitable accommodation for rental has placed enormous pressure on the rental market, forcing prices ever upwards. There is no real mystery as to why this is happening. The current taxation policy is a serious disincentive for buy-to-let owners, plus the outlawing of the ever-dependable bedsit. Add to this the fact that what would have been first-time buyers are now becoming long-term renters because of lending restrictions. Then add the fact that for every three rental properties sold, only one will continue to be rented - all of these combined result in a shortage of supply which has the inevitable result of driving up rents.
Individual buy-to-let owners cannot resolve this problem. Only through a partial restructuring of the planning system, which will allow for the type of zoning to facilitate long-term rental-only developments for a complete mix of housing, which will in turn appeal to the larger funds and investors, will the problem be solved. A new generation of lifetime renters need to be catered for.
- Marcus Magnier is head of residential, development and country homes and a director at Colliers International