Wednesday 12 December 2018

The essential guide to new homes around the country

While demand still outstrips supply, our New Homes list shows a welcome increase in the number of schemes launching during 2018. Fran Power surveys the market

Real Estate digital design, vector illustration eps 10
Real Estate digital design, vector illustration eps 10

At last some good news - there are signs of life in the New Homes market. It may be the only glimmer of hope in an ailing property market but, as our nationwide listing of new phases and launches shows, a much greater number of housing schemes will come to completion this year.

While figures for exactly how many new homes were built in 2017 are disputed, there is no doubt that construction is up, with more than 100 projects live on site. According to Housing Minister Eoghan Murphy, more than 11,000 units were submitted to An Bord Pleanala for approval via the new fast-track system in the second half of 2017 alone.

Of course, this increase in supply will be a drop in the ocean of what is needed to meet demand - figures range from 25,000 to 50,000 new units a year - but it shows that despite their grumblings about high costs and low profit margins, developers are now confident enough in the long-term stability of the market to start breaking ground.

While sales of New Homes were up across the board, it was those aimed at the starter market that saw the largest increases in volumes, indicating that Government incentives such as the Help to Buy scheme, as well as the easing of the Central Bank's regulations on mortgage lending to FTBs are having a positive effect.

The number of mortgage approvals to FTBs rose 31pc in 2017 over the previous year, and the value of mortgages jumped by 46pc over the same period, according to the latest Banking and Payments Federation Ireland figures. However, many in search of affordable family homes are being forced further out of the city to the commuter belt counties.

Ivan Gaine, director of New Homes at Sherry FitzGerald, says of 2017 sales: "We were up year on year and we saw the biggest change in velocity in the first-time buyer (FTB) schemes. I think the Help to Buy has worked and has given our clients confidence around the breadth and depth of that market."

At Savills, David Browne, head of New Homes, describes the level of sales in 2017 as very positive - at Grangeabbey in Monkstown, for instance, a development aimed at FTBs and trader-uppers, there were 700 enquiries over a two-week period. Browne believes the trend will continue, given the strength of the demand among FTBs to get on the ladder.

Gina Kennedy, New Homes director at DNG, agrees: "This year is going to be a very busy year in New Homes, particularly in the FTB market and especially because the Help to Buy scheme ends in 2019."

Did the Help to Buy fuel the double-digit price inflation we saw in 2017? Economist Ronan Lyons, author of the Daft.ie house price reports, is not convinced: "By and large, I'm not sure the Help to Buy has had a big impact on the market - the number of New Homes is small relative to the entire market, so the change in Central Bank rules is far more likely to have had a big impact. Nonetheless, even though its effect is small, it is a demand-side measure and therefore any pressure it has had on prices is likely to have been upwards."

Last week, Minister Murphy unveiled a new affordable housing scheme aimed at those trying to get on the ladder. In the days since the measure was announced, there has been a 9pc jump in searches for qualifying properties, according to Daft.ie. The knock-on effect will be to place even more pressure on a market already chronically low in supply.

There is also the issue of a lack of apartments, says Ken MacDonald, of Hooke & MacDonald. "There is a huge demand for them throughout the city in all locations, because with the demographic picture moving rapidly towards a place where three-quarters of the population are either in one-, two- or three-bed units, there is a very substantial demand, particularly close to transport and employment centres.

"It hasn't been viable to build apartments In a lot of locations due to the build costs," says MacDonald, though he agrees that the recent easing of regulations on apartment specs will help. "But it still needs more than that to generate the type of volume that's needed for the market for different categories of buyers."

He points to the 13.5pc VAT rate as a significant obstacle to developers. "It is mistakenly called at times 'an assist to developers'. It's the purchasers who pay the VAT, it comes down to the purchasers' pockets not the developers'."

It's a matter of time, says Browne, with reference to apartments. "You should see more coming on as well as going into suburban locations because the viability and price point is back. There's more coming."

In fact, he believes there will be a cultural shift away from houses and towards apartments: "Everyone wants a house that's a three-bed semi with a side entrance and a back garden and a car park. You can't get planning for that in the city any more. They are few and far between; there's going to be higher density blocks of apartments being built and people will adapt culturally."

There are other challenges facing the market. Among them are what Ivan Gaine at Sherry FitzGerald calls 'infrastructural challenges' which are holding up live projects on site such as the large scheme at Clay Farm in Leopardstown that was recently refused planning permission.

"The policy and the detail of Rebuilding Ireland is showing some benefits," says Gaine, but "we need continued refinement of policy changes. When we're putting theory into practice and the theory is broadly positive, in practice it doesn't always run the way we expect it."

Our New Homes nationwide guide shows that more than 170 housing schemes are currently selling, or set to release either new phases or launch brand-new developments over the coming months. Some are small infill schemes, but others are more sizeable and at prices that offer FTBs the chance to get their foot on the first step of the property ladder.

The northside Dublin suburbs of Clontarf and Santry and Castleknock all see new schemes launching in the first half of the year, the largest of these a 900 unit development at Belcamp on the Malahide Road. Further afield, Donabate, Malahide and Portmarnock also see new projects coming to completion.

Southside, Ardstone Homes launch a 351-unit scheme of family homes in the FTB price range at White Pines in Rathfarnham, while the first phase of 74 family homes launches at Ballycullen Green in Dublin 24.

Other south city launches are for the most part, smaller schemes aimed at the higher end of the market, such as at Brighton Wood in Foxrock, due to launch in April.

The commuter belt continues its spread and while there are relative bargains to be found here, purchasers pay the price in longer commute times - Co Kildare sees new launches at Castlewellan Park in Celbridge, Castle Farm in Naas and Carton Grove at Maynooth.

North Wicklow's popularity among commuters is confirmed with developments launching at The Friary in Bray, Cairn Homes' Glenheron in Greystones, and further south at Kilcoole with Newlyn's Ternlee scheme of 59 family homes priced at €315,000 for a three-bed semi, and Ballinahinch Wood in Ashford.

The regional cities at last see some much-needed additions to housing stock with further phases and a new scheme at Oranmore launching this month, but in general, these areas are lagging a year to 18 months behind the capital.

 

Six tips to help you get mortgage approval

Before you go house hunting, it’s advisable to get your mortgage sorted, since many schemes won’t take a deposit unless you can show your funding is in place. Michael Dowling, managing director of Dowling Financial, and Sinead Ryan share their tips:

1: Establish your repayment capacity — make sure you have saved, or paid rent, equal to the mortgage repayments plus 2pc. A bank will stress-test the mortgage repayments at 5.5pc on average, even though you will be paying at 3.5pc. You need to be able to show six months of established repayment capacity (bank statements) in advance of submitting your application.

2: Manage your current account — you need to supply the bank with six months of current account statements. Make sure you have no unpaid items, not more than one referral item, no regular online gambling and rent paid by direct debit rather than cash. Show that you manage your current account.

3: Permanent and stable employment — banks look to lend to people who are in permanent employment for a minimum of 12 months and working in a company for this length of time. You will not get a mortgage if you are on probation. If you are on a contract, you need to show you have worked for a minimum of three years — preferably with the same employer — and that you have had no gaps in employment. If you are self-employed, have all your accounts fully up to date. If you are a contract worker, include a copy of your CV as well as your last three P60s.

4: Income — the Central Bank has imposed lending limits based on income (3.5 times your salary) and value — 90pc of purchase price is the maximum loan to a first-time buyer, 80pc for a second-time buyer. Banks will calculate from 100pc of basic salary and 100pc of guaranteed overtime, but will only take up to 25pc of bonus or commission. If you can show three years of consistent overtime and bonuses, they may consider 50pc of this figure in calculating the income multiple.

5: Deposit — you do not need to have all of your deposit before you apply. Once you have confirmation that a gift is available, ie, from the bank of mum and dad, that will suffice for approval in principle.

6: Use a mortgage broker — there are nine lenders in the market, excluding the local authority option. The cheapest variable rate mortgage for 90pc lending is 3.15pc, the dearest is 4.5pc. Use a regulated and authorised broker to shop around and research the market for you; it will save you money and heartache in the long run.

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