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Get Real!

The new property reality...


Like many things these days, the chances of selling a property seems to boil down to one factor: putting a realistic price tag on it and then being willing to take less than that.
For estate agents around the country the last six months have been their worst nightmare. The younger generation of property professionals has never encountered the frustrations of the kind of market in which they are now operating.

In the last six months there has been a growing body of buyers who are ready with mortgage approval or cash in the bank. These potential buyers have been tentatively viewing properties, and some even made offers. Then the daily diet of bad news increased and they evaporated back to the arms of the rental market - or their parents spare rooms - to sit it out.

So what properties have sold in the last six months, the toughest months in a generation? The answer seems to be those that are 30 to 40 per cent cheaper than houses were on the same streets and roads during the peak of 2006.

‘‘The only thing moving them are extremely realistic asking prices,” said Ronan O’Hara, a director at Savills.

‘‘That means a 30 per cent reduction on prices since January last year, and buyers certainly shouldn’t be shy in asking would the vendor take less. In some cases they will, and the reason is that they will be getting the same value in whatever they’re buying further down the line.”

On the good news side of the balance sheet, first-time buyers and ordinary buyers now have increased mortgage interest relief, less stamp duty to pay and steadily dropping mortgage rates. ‘You’ve got people who have been looking for a year, they’re sick of it at this stage - and they just want to get on with their lives,” said O’Hara.

These are the buyers who he believes will buy a property in the coming weeks and months despite predictions of further price drops, ‘‘as long as it’s well within their financial comfort zone.

‘‘You have a situation where big three or four-bedroom semis in places like Glenegeary with 80-foot back gardens which would have been selling for nearly €1 million at the peak, are now something in the order of €675,000 to €700,000,” he said. Houses in some south Dublin estates are now available for the price of apartments, and the price drops at the top end of the market have been even steeper, he added.

In recent months Savills sold 25 Idrone Terrace in Blackrock, a 288 square metre four-bed Regency terraced house which was on the market for €2.8 million but which fetched less. The firm also sold Ballycrane, a detached Victorian 139 square metre three-bed redbrick on Castlepark Road in Sandycove, which was asking €995,000.

In better times both of these properties would have been auction sales that may have sold for more than their guide price. Instead buyers bought in a calm and unhurried manner, where all the cards were stacked in their favour.

According to Michael Grehan, managing director of Sherry FitzGerald, there are three categories of properties where sales are happening. The first are those properties close to Dublin city centre, particularly the apartment market around the docklands and the IFSC.

‘‘The numerous incentives introduced over the last year and a half, including increased mortgage interest relief and reduced stamp duty, encouraged first time buyers into the market.

The increased affordability of smart apartments in this location was improved by the reduced asking prices of many of the properties for sale,” he said. Sherry FitzGerald sold a two-bed apartment at the Gallery Quay development, which was originally on the market at an asking price of €575,000.

The second sector Grehan identifies is ‘‘established, more mature suburbs, particularly in locations with good transport routes like the Dart or Luas - and even better if they are located close to the coast’’.

Like Savills, Sherry FitzGerald has seen ‘‘realistically priced’’ three and four-bed family homes with good gardens in Dalkey, Glenageary, Clontarf and Blackrock sell well. Price drops meant that buyers were able once again to afford to buy in an area where they grew up, and the buyers were mostly people trading up from first homes.

In this segment Sherry FitzGerald sold a four-bed semi on Glenabbey Road in Mount Merrion which had been on the market at an asking price of €1.035 million.

The third category, the top end of the Dublin market has seen the steepest price drops, Grehan believes. ‘‘In fact we have evidence that in some instances the fall has been as high as 50 per cent from peak to current levels,” he said.

‘‘Some of the successful sales over the last couple of months included properties that ended up selling for up to and over €1million below their initial asking price.” In recent months the firm sold 83 Upper Leeson Street, which was originally asking €2.5 million.

Grehan believes there is something of a pent-up demand among buyers who have been sitting it out waiting for prices to get to the bottom of the curve. ‘‘We were pleased with the level of offers and the 20 sale agreeds that occurred in our first week trading last month,” he said.

But he believes that more transparency, and agents being allowed to disclose selling prices, would show buyers that the significant price drops for which they are waiting have occurred. All three properties mentioned above sold for significantly less than their original asking price.

The managing director of Gunne estate agents Declan Cassidy has also seen buyers making the decision to go with an offer once they see a property significantly cheaper than similar ones were two years ago.

‘‘I’ve been in the situation where people say to me, ’Declan, why should I buy this house?’. I can point across the road and tell them ‘that house sold at the height of the market, in slightly better condition than this one, for €850,000.And this one is asking €550,000’.”

Many of Gunne’s buyers in the last six months had moved into rented apartments and houses, or back in with parents waiting to see how the market was going. ‘‘But then your life is on hold,” said Cassidy.

‘‘The advantage of not waiting is viewing the property as a home rather than an investment, and buying in much calmer conditions than have prevailed in the last decade.

Buyers see a house that they can get for under the asking price and not be in a bidding war with someone else.”

Cassidy estimates that up to 40 per cent of the firm’s buyers in the last six months have been first-time purchasers. ‘‘They are people who have heard all the dire predictions but want to get into a home and live in it without worrying about its value in the short term,” he said.

Sales have been good, he says, for northside Dublin properties between East Wall and Clontarf. One property, 44 Mount Prospect Grove in Clontarf, went on the market at the end of August and the sale closed before Christmas. The asking price was €595,000 and the three-bed semi needed work.

Another property, 2 St Mary’s Terrace in East Wall, went on the market in September at €225,000.The one to two bed terraced cottage was also in need of modernisation, Cassidy said.



Reoprt by Catherine Cleary - Sunday Business Post.

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