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Dan White: A tale of two property markets as sales rise only in good locations

Property website myhome.ie is now reporting that the number of houses in Dublin on which sales have been agreed has more than trebled over the past 12 months, up from 200 in January 2009 to 658 in the first month of this year.

On the face of it, the myhome.ie numbers are at variance with other data emerging from the property market.

This week mortgage bank Permanent TSB announced that it was scrapping monthly publication of its house price index as the lack of transactions taking place made it impossible to meaningfully calculate the state of the market, while Construction Industry Federation boss Tom Parlon admitted that house prices had fallen by at least 50pc since their early-2007 peak.

So what's going on here?

Why are we getting such apparently contradictory signals about the underlying health of the housing market?

In fact, the myhome.ie figures will have come as no surprise to property professionals.

Since September of last year there has been a pick-up in demand for second-hand homes in established suburbs close to good schools, shops, pubs and public transport links.

While this trend has been most pronounced in Dublin. something similar is happening in Cork, Limerick, Galway and other large cities and towns.

So is it time to call the bottom of the property market?

Not quite.

First things first: while any sign of a recovery in the property market is welcome news for hard-pressed homeowners, the numbers involved in the myhome.ie survey are tiny, just 658 in Dublin and less than 1,200 for the whole of Leinster.

Compare this to what was happening in 2006, the year before the bubble burst.

Way back then, almost 90,000 new homes were sold and over twice that number of secondhand properties went under the hammer, a total of over quarter of a million homes and apartments. When seen in this context, less than 1,200 properties going "sale agreed" last month is neither here nor there.

Before the property mania of the late nineties and noughties took root the best advice for would-be buyers was always location, location, location.

Now that the dust is beginning to settle after the crash the wisdom of that advice has never been more apparent.

So if you were shrewd or lucky enough to buy in the right place the worst is now probably over.

Congratulations.

Which, of course, leaves the hundreds of thousands of homeowners who didn't buy in the right place, most of them because our overheated property market meant that it was a choice between buying in some remote, God-forsaken, out-of-the-way location miles from schools, shops, pubs and public transport, or not buying at all.

For these homeowners the outlook remains grim.

All of the evidence points to the reality that the price of houses and apartments in such secondary locations hasn't fallen by 50pc, more to them not being sellable at any price.

And as for those unfortunates stuck in so-called "ghost estates", their plight doesn't bear thinking about.

What we are now confronted with is the emergence of a two-tier property market.

Now that prices have fallen by 50pc or more buyers are prepared to take the plunge in established suburbs.

Perhaps even more importantly banks are prepared to lend against such properties.

It's a very different story in the outer commuter belt where hundreds of thousands of new houses and apartments were built in last decade.

In today's market these can't be sold at any price.

For the owners of such properties the agony may be only beginning.


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