Last year followed a similar New Homes pattern to the previous year, with sales volumes continuing to increase and a higher weighting in the first half of the year. Schemes in Cork which commenced in 2017 are nearing completion and are now host to bustling new communities.
We had a very busy launch season in Spring and Autumn managing a number of new schemes. Our sales volumes increased by approximately 20% on last year with Sherry FitzGerald New Homes agreeing over 240 sales in Cork.
Notably, 65% of our transactions were under €350,000. Another 29% were in the €350,000 to €500,000 bracket so over 94% of our sales are under €500,000. Some of the highlights for us were the release of new schemes such as Ballinglanna in Glanmire, Martello in Rushbrooke, and Blackrock Villas, with new and final phases in Drakes Point Crosshaven, Kinsale Manor and Clonlara, at Kerry Pike.
This year again has seen the most active cohort of buyers remaining as the starter First Time Buyer market, with the Help to Buy rebate continuing to be an important factor: 60% of our sales were to FTBs.
While we are pleased that the First Time Buyers’ Help To Buy scheme has been extended for a further two years it has been proven, since its inception, to be necessary to assist struggling first-time buyers in securing a home. Incentives need to remain in place for longer than the fixed short periods proposed. Residential development takes time and developers, financiers and buyers need as much certainty as possible.
After the First Time Buyers (FTBs), traders remain the next important sector in the market. Private investors are almost nonexistent in the New Homes market and this is not normal but reflective of the dysfunctional market.
We would encourage the Government to implement other policies to address the national housing crisis. On the demand side we advise a review of the Central Bank’s Macro Prudential Rules and tax treatment of private landlords. On the supply side, the Government should set clear annual targets for housing plans, refine the ‘fast track’ planning process and make the necessary investment in utilities and transport, infrastructure.
When Goodbody analysed the 18,000 completions in 2018 they found over a quarter were built by self- builders, a further 25% were acquired or delivered by the state (through AHBs etc) with only about half of the completions coming to the market for sale by industry.
The Residential Tenancies Board acknowledge the net loss of 12,000 rented homes in the period of 2016-2018 highlighting the need for choice and delivery of all types and tenures of home.
So what for 2020? New schemes are now under construction and Quarter One will be a very busy time with new releases expected in several locations around the city, suburbs, and metropolitan areas.
These include Mountwoods in Douglas, Abbeyfort in Kinsale and next phase launches in Ballinglanna at Glanmire, Drakes Point in Crosshaven Martello at Rushbrooke, Heathfield at Ballincollig, townhouses at Blackrock Villas, Harpers Creek in Glounthaune and Barter’s Wood in Tower.
These new schemes should all be of interest to First Time Buyers as the unit mix includes house types which should serve this market well. As an example of this we witnessed a lot of activity in Martello, Rushbrooke throughout the year with 35 sales in 2019 of well-priced three-bed semi detached homes at the €255,000/€265,000 level.
Price point is key, and homes that can be delivered to the market and priced below the €300,000 threshold will be in demand. We have seen activity for all the lower priced homes in 2019 and we expect this trend to continue.
Active developers in Cork include O Flynns, Astra and Murnane & O’Shea, O’Callaghans, Ruden, Hallmark, DOB, Gannon, Centurion, Glenveagh, Homeland, O’ Mahony, OBR and Caraden. These are all producing new homes around the Cork city suburbs.
While demand currently still outstrips supply the larger number of homes being delivered across more schemes has resulted in buyers being more considered and taking longer to make their final decision before committing. Purchasers are often solely focusing on New Homes, this is due to many factors such as the running cost savings based around the A energy rating, Help to Buy rebate scheme, higher specifications, structural guarantee and being able to put their own stamp on the home.
The extensive amount of office accommodation under construction in the city centre will put further upward pressure on the already struggling letting market. Developers are actively progressing with “Build to Rent” (BTR) apartment blocks in various locations around the city, with planning permission being achieved for large schemes during 2019 to include Gasworks Road, Horgan’s Quay, Ursulines Blackrock and Albert Quay (decision pending). A planning application on the former Ford site is due to be lodged in 2020.
It is expected Cork will see its first forward-sale commitment purchase of a block of apartments in 2020. This would add much needed rental product to the Cork market and appease some of the major employers who have highlighted the problems they have in recruiting staff, given the lack of good quality residential accommodation available in the major urban centres. Unfortunately, this may only deal with the top end of the market as the rents that need to be achieved for scheme viability will have to be at premium levels. Whilst we need to urbanise, that will take time and in the interim we need a transitionary plan, both suburbanising and urbanising in tandem.
New housing will rightly be a key issue in the lead up to the election in 2020 and some radical thinking is required. Innovation in construction delivery, consumer liquidity and a targeted approach by tenure is required. We need to persevere and collaborate across public and private sectors to create solutions.
Individual tweaks to the market are not good, cohesive policy introduction is what is required.
More choice is now available for purchasers, but we need to make the possibility of owning a home attainable for our younger population.
Paul Hannon is Director of Sherry FitzGerald New Homes, Cork