The popularity of four-bed semi-detached homes, active first-time buyers, and fewer bidders in the resales market were notable trends in 2018, write Catherine McAuliffe and Michael O’Donovan.
2018 has been an exciting year in both the resales and new homes market in Cork.
Similar to other leading estate agents locally, Savills had a range of new homes instructions, and launched Aylesbury in Ballintemple, Crawford Woods in Glanmire, Heathfield in Ballincollig, Castle Heights in Carrigaline, and Ard Alainn in Kinsale. Existing schemes continued to sell throughout 2018 including the very exclusive Winters Lane, Convent Garden in Kinsale, Rockbrook in Midleton, and Earls Well in Waterfall to mention a few.
With a wide range of unit type and price to offer, trends seen throughout the year in this now fully emerged market included the popularity of a four-bed semi-detachedn with many buyers getting parental help to stretch to the larger unit on the basis that the house will suffice for a much longer period of time and maybe for life.
First-time buyers are extremely active, with the Help-To-Buy buyer tax rebate incentive scheme being a driver to purchasing a new home compared to a second-hand one. Savvy buyers are willing to pay a premium for a higher quality A-rated highly efficient home, cheap to run, and ultra-modern.
The quality of build is poles apart from those constructed during the noughties housing boom with building regulations tightening on a regular basis to ensure all homes are now not only built to the highest of standards but certified at each stage of construction by a qualified engineer.
These regulations are set to change again during 2019 when an A-rated house will no longer have a chimney and an electronic E-series coal/log effect fire will be the likely focal point in the main living room. These fires look, sound, and feel like an open fire but are conveniently operated by the touch of a button.
Air to water heating has also become the norm in most new homes, again complementing convenient living by giving constant heat and pressurised hot water and eliminating gas or oil boilers and extra fuel bills. New age induction cooktops with built-in extractor fans, clever storage, and best use of space through built-in furniture, wall-hung bathroom ware and vanity units, Silestone worktops, and ultra-modern cement finish kitchens incorporating that very essential wine fridges to mention a are a few interesting additions now seen as standard in some new homes.
What you don’t see in your finished home, however, is the extremely high level of insulation now essential in all new builds, together with heat recovery units ensuring air tightness while fresh air is constantly being refreshed throughout the home.
Underfloor heating is now the norm rather than the exception though most builders still provide Alu rads on the upper floor for easier temperature regulation in the bedroom.
This all leads to a strong argument for the price differential between new and secondhand homes. It is important buyers are aware that while current prices still remain well below peak in 2007, costs of construction are much higher than in the previous cycle of building and as regulation tightens, utility connection fees and local authority contributions increase, and VAT remains in place at 13.5%, this is not set to change. The lack of construction industry tradespersons is also a factor to be considered.
[timgcap=Earls Well, Waterfall.]zzzDevelopmentPlanCorkHousingDec282018_large.jpg[/timgap]The blossoming of the new homes market has increased the supply of secondhand homes as traders up and traders down ‘right-size’ for their current property needs and place their own property on the market, as moving home has now become a real option. This welcome increase in supply is naturally alleviating the upward pressure felt on the price of a secondhand home which for a long period was the only source of supply in all sectors of the market.Viewing levels remained on a par with 2017 but there was a notable drop in the number of bidders in the resales market, resulting in a longer sales period and guide prices remaining a fair reflection of a selling price, sometimes a little higher, sometimes a little lower.There were, of course, exceptions with some resales in prime areas such as Blackrock surpassing expectations by up to 20% due to the uniqueness of the offering and also some underperforming, mainly due to high asking prices and an increase of supply of a similar type of property in the general location locality. While price growth continued in 2018, it was at a slower pace and sometimes as a result of sensible initial pricing and aggressive marketing.The rhythm of the resales market in 2018 was less audible than before and required a measured approach to ensure continued growth. This is not surprising and was always going to materialise as supply increased.While supply is set to rise again during 2019, the real question in the market going forwardis, ‘do we have capacity to transact a higher level of sales than that already being achieved?’In Cork, with a population of well over 500,000, we have transacted between 5,000 and 6,000 residential property sales every year since 2015, by far the second strongest level next to Dublin (population of approx. 1.7 million people) which has transacted about 15,000 to 17,000 residential sales every year since 2015.The capacity answer, we believe, is that there is headroom for a higher level of transactions in the years ahead in Cork.
Expectations of population growth due to inward investment in commercial development, the attraction of our second city as a choice for multinationals, and residential development in the city centre, on the quays and dockland area, will see the emergence of high rise PRS, all likely to form a significant part of a busier market and to accommodate Cork’s private housing needs.
With rents at all-time high levels, renters will be the future buyers and tenants will be the transient workforce who prefer to be city centre dwellers without a mortgage commitment.
Multiple cranes in the skyline confirm our city is growing, which can only bring a more active and more mature normalised market.
Michael O’Donovan and Catherine McAuliffe are residential agents with Savills, Cork.