More Was Needed To Increase Rental Supply

Nationwide property group, Property Partners have welcomed the ‘Help to Buy’ scheme announced in Budget 2017 but have said that ‘an opportunity has been missed’ to address the perilously low supply of rental property which currently stands at only 3,500 units in a market that has a demand for a significantly higher number. According to Ronán Long, Chairman of Property Partners, “Residential rental values are spiraling out of control, especially in large urban areas with increases of up 40% experienced over the last three years. This simply is not sustainable and while the ‘Rebuilding Ireland’ initiative addresses future needs, the short term supply of properties to rent is not being adequately addressed. The increase in the relief from 75% to 100% over the next five years is to be welcomed however the affect will not be felt quickly enough”.

Barry Herterich of Property Partners Barry Herterich added “The supply of rental properties available currently at a local level can be counted on one hand. Additional incentives are need immediately to entice investors back to the rental market. Ultimately if this is not addressed it will be the first time buyer that will be worst affected as they will continue to be excluded from both the mortgage market, due to the onerous earning requirements and the rental market due to exorbitant rents. The expected reduction in VAT on new homes from 13.5% to 9% did not materialise and would have been of real assistance in the delivery of additional homes”

Property Partners is an independently owned nationwide group of auctioneers and estate agents. Established in 2000 the group has 30 offices nationwide. Many of its principals are long established in their locality and have experienced the extremes of the Irish property market. All are members of the SCSI or IPAV and cover all sectors of the market. The group’s offices are based both in the capital and throughout the regions

“There’s a huge demand for property in Tramore.”

Dermot Keyes, Muster Express

The lack of available property for sale in Tramore was made plain by Property Partners’ Barry Herterich during an interview with The Munster Express, in which he stated that ‘more and more people’ are expressing interest in relocating there.  

"For example, on (Thursday) September 8^th, if you did an online check for all the estates along the Ring Road in Tramore – Moonvoy Valley, Meadowbrook, Clarinwood, Westbrook, Ballycarnane Woods – guess how many houses from those estates, combined, were on sale that day? Three. Just three," said Mr Herterich.

"All of those estates that were built in the late 90s, and you’re talking about traditional starter homes in terms of those looking to enter the market, there were very, very few houses across those estates for sale, and that’s a problem for first time buyers looking to buy in Tramore.

He added: “The mood in Tramore is very upbeat and really positive The town is flying. More people want to live here, and having more people living here will inject more money into the town, but to make that happen, we need more houses."

Speaking in his Main Street office, Barry Herterich spoke about the growing demand that's being expressed from "people from Waterford city, along with people currently living out in the country".

Mr Herterich continued: "What I found, during the boom years, is that people from towns wanted to go out and build a big house out in the country. But that seems to have reversed now. Now the recession has been responsible for that to some extent in that people wanted to cut down on car costs, the maintenance of a bigger house, the maintenance of a bigger garden and so on, and they wanted to be able to walk to shops and to get their children into school with a little less hassle, as well as having amenities closer to hand."

Citing the relatively recent arrivals of Tesco and Lidl to Tramore, the building of new schools in the town "and the draw of the sea, which cannot be underestimated", Barry Herterich said the area "has so much going for it now from a prospective house buyer’s perspective.

"Be it people who want to retire in Tramore or young couples wishing to relocate here with their children, the quality of life here is hard to beat."

While S.E. East Construction (Kent) has attracted strong interest and initial phase of three and four-bedroom semi-detached and detached properties at Knockenduff, Barry Herterich added: "you're still talking small scale in terms of the numbers of houses being built - so supply remains a massive issue in Tramore."  

Barry Herterich explained the two-fold impact that's been catalysed by the shortage of stock. "I’ve come across a lot of people who want to sell with the intent of trading up, but there’s nothing there for them to buy, and as a result of that, they’re not putting their homes on the market. So, in effect, you’re talking about two sales not being made when you factor in both those instances, and there are lots and lots of people who are stuck in houses that they now feel are too small for them; they can afford the bigger house, but there’s just not enough out there."

"And because there’s not enough choice, they’re then afraid to put their house on the market and get a buyer given that they’ve got nothing to move on to, so the whole dynamic of the market is not functioning properly at all. And that is a major problem; there are a lot of people who are probably not in negative equity now, who can afford to trade up, but there’s nothing out there for them now."  

Delighted with the upturn in Tramore's economic fortunes, and its status as the county's most populated town, Mr Herterich said that "having so few houses being built at present, at a time when the town is becoming more prosperous, is a symptom of the problem in the market".

Reflecting on the costs of building, which appears to be putting developers off major residential projects, Barry Herterich stated: "Building regulations seem to be too onerous and too expensive to implement. The VAT on houses and all the taxes associated with new builds, including the development charges which are ultimately passed on to the purchaser – all these costs mean that the price to build a house at the moment effectively means the builder isn't in a position to make any money...They can’t justify the risk of getting diggers and earthmovers in on land that many of them bought for top dollar during the boom. The cost of building is simply too dear."  

Prices Continue to Rise

Residential property prices continued to rise in Tramore throughout 2015 and during the first two months of 2016. Prices rose by as much as 15% during 2015 for properties up to €200,000. At the higher end, for properties in the €300k + region, price growth has been lower, around 6%. This has been no doubt due to the impact of the Central Bank’s mortgage restrictions meaning that second time buyers must come up with 20% of a deposit. For the generation who are trying to trade up to a larger family home coming up with €60 to €70,000 deposit plus transaction fees is extremely difficult when in most cases these type of buyers either have very little positive equity or possibly negative equity in their existing home.

The popularity of Tramore as a place to live is continuing to soar with many people from outside the area wanting to move here for the quality of life we are lucky to enjoy. This is one of the reasons I expect prices to continue to grow during 2016, albeit at a slower pace than the previous two years. Supply issues and restrictive mortgage rules will continue to make the search for a dream home a frustrating experience for many buyers. Unfortunately nine years after the start of the property crash we still don’t have a properly functioning market.    

Nationally, residential property prices grew by 6.6% in 2015, significantly lower than the 16.3% recorded in 2014. The slowdown in price growth was caused by a cooling off in the Dublin market with prices there rising only 2.6% in the year. Excluding the Dublin market prices in the Rest of Ireland were 10.2% higher than in 2014.  By the end of 2015 the price of residential property in the Rest of Ireland was 35.4% lower than their highest level in September 2007.

Barry Herterich BA MIPAV REV

Property Partners Barry Herterich Responds to Budget 2016

Budget 2016 – Housing Measures

 

▪       Property tax re-evaluation has been postponed until 2019. Minister Michael Noonan says this will mean that home owners will not be faced with significant increases in their LPT in 2017 as a result of increased property values.

▪       Elsewhere, the Group A tax-free threshold for Capital Acquisitions Tax, which broadly applies to transfers between parents and their children, is being increased from €225,000 to €280,000.

▪       Revised Capital Gains Tax relief from 2016 sees reduced rate of 20% for disposal in whole or part of a business up to an overall limit of €1m in chargeable gains.

▪       Meanwhile, NAMA is to deliver 20,000 new residential homes by 2020 at a cost of €4.5 billion. 90% of these will be in the Greater Dublin area.

▪       The allocation for social housing is to be increased by €69 million, to €414 million. This will aim to help local authorities secure accommodation for an additional 14,000 households.

▪       Minister for Social Protection Brendan Howlin is making €10m available from the proceeds of the sale of Bord Gáis Eireann for an affordable housing pilot scheme.

▪       The current allocation for emergency accommodation of homeless people is also being increased by €17m.

▪       The Home Renovation Incentive has also been extended until 31 December 2016.

Property Partners welcomes the postponement of the property tax re-evaluation until 2019 citing that this will mean that home owners will not be faced with significant increases in their LTP in 2017 as a result of increased property values.

Property Partners also welcomed the announcement of an increase of the Capital Acquisitions Tax tax-free threshold, for transfers of properties between parents and their children, which rises from €225,000 to €280,000. This is expected to be the start of a process that will see it increase to €500,000 over a three to five year period.

For more details of how the Budget will affect you, please contact Barry Herterich at Property Partners Barry Herterich on (051) 330465.

Tramore buyers frustrated at lack of choice

The Tramore property market continued to grow in 2015 with the number of houses sold in the first seven months of the year up 25% on the corresponding period in 2014. More significantly, the total value of property sold in the Tramore area in the seven months to the 31^st July 2015, excluding holiday homes, is up 55% on the same period in 2014. This reflects the continued steady growth in prices but more significantly, an increase in the number of houses in the higher end of the market that are now being sold.

Whilst this is good news for anybody thinking of selling, buyers are getting increasingly frustrated at the lack of supply and choice available to them. Unfortunately it doesn’t appear that this situation will change in the short to medium term. Many current home owners who want or need to move because they have outgrown their house are either unable to sell because of negative equity or they don’t have the 20% deposit required to buy a new home. Adding to the problem is the high cost involved in building new estates which is preventing developers from providing new builds. Those that are benefiting from this situation are smaller builders and trades people as homeowners look to build extensions and make home improvements as they prepare to stay in their house longer than they might have originally envisaged.

 

Barry Herterich BA MIPAV REV

Property owners urged to review insurance policies as cost of rebuilding home goes up

THE cost of rebuilding a home has gone up, prompting warnings to property owners to review their insurance cover.

Higher rebuilding costs could also lead to an increase in home insurance premiums, experts said.

The Society of Chartered Surveyors Ireland said the national average rebuild costs have increased by an average of 4pc this year in 2015.

Its Guide to House Rebuilding Costs, which is used by homeowners to calculate the rebuilding cost of their home for insurance purposes, shows that costs vary significantly depending on location.

In Dublin, the average rebuilding costs on a standard home increased by 3pc. For a standard three-bedroom semi-detached house that means it now costs €178,000 to rebuild it.

The average minimum rebuilding costs for a standard house in Cork and Limerick increased by 5pc.

Andrew Nugent, president of the Society of Chartered Surveyors Ireland, said: “The key for homeowners is to check that their house rebuilding costs – the reinstatement costs involved in rebuilding a house in the event of a catastrophe such as a fire which are required on all home insurance premiums, are adequate and fully in line with current figures.”

He said homeowners need to check the “sum insured” on home insurance premiums to ensure they are fully covered and not over or underpaying. 

Market to Remain Positive in 2015

According to the official CSO index residential property prices rose by 12.3% in 2014 and increased by as much as 21% in Dublin. However the CSO also indicates that prices fell by 1.4% in January and by 0.4% in February.  So where is the market expected to go in 2015?

The fall in house prices in the first quarter of 2015 was led by a fall in prices in Dublin where affordability was becoming stretched. House prices in Dublin are 5.9 times the average wage compared to 3.9 times in the South East. Outside of Dublin however both MyHome.ie and Daft.ie have recorded an increase in asking prices in the first quarter of 2015 with asking prices in Co. Waterford 12.2% higher than in Q1 2014.

It is unsurprising that the property market has calmed down somewhat after the ‘mini bubble’ that appeared in the second half of 2014. The end of the capital gains tax exemptions, which may have temporarily inflated demand last year, has reduced the number of investors currently in the market. In addition the new Central Bank’s mortgage lending rules have reduced the affordability of second time buyers in particular.

The number of sales completed is up significantly in 2015 compared to the same period in 2014. According to the Property Price Register nationally the number of transactions completed in the first two months of 2015 is up 44% on the corresponding period last year. The number sales closed in Tramore in the first quarter of this year is up 52% on the same period in 2014. However with the conveyancing process often taking up to three months to complete it is reasonable to assume that most of these deals were actually agreed in the latter part of 2014.

In summary there appears to be the continuation of a two speed property market in this country, which has been the case for a number of years now. Property price growth has slowed in the capital with some evidence of falling prices. But the property market cycle in the rest of the country lags Dublin by 9 to 18 months and as yet there is no evidence to suggest that local property prices won’t continue to increase in 2015, albeit at a lower rate than last year.

Barry Herterich BA MIPAV REV