Several factors define city market, including parents buying for children and foreign demand writes Kevin O’Neill.
The property market on the southside of Cork City is active but a lack of new houses is undermining its growth potential. In the centre of Cork City, there have been few completed developments in recent years while further out into the southside suburbs, work is picking up but many of the large scale new developments required to meet a growing population are still some way off.
According to MyHome.ie, average prices in Cork City are up €5,000 in the last quarter and year-on-year, a rise of 2% from €250,000 to €255,000. This has left prices in Cork City at their highest level in exactly nine years since the average price stood at €265,000 in the third quarter of 2010.
The MyHome.ie report does not break down the city prices between north and southside, however the CSO’s most recent Residential Property Price Index helps to paint a picture of the divisions between areas north and south of the river.
In the T12 Cork Southside Eircode area, median prices are €295,000 on average in the year to date, compared with a national average of €295,000. It is one of the most expensive areas in the country outside Dublin, and only two areas in Co Cork exceed it: Ballincollig and Kinsale.
Estate agents have reported strong demand in the southside, with the picture of the market changing somewhat in the last 18 months or so. Michael Downey of ERA Downey McCarthy describes the Cork City market as “active” but warns that first-time buyers are struggling to get a foothold in Cork City centre, with pricing and the availability of stock proving prohibitive.
According to the CSO’s tracking of house prices by Eircode, first-time buyers accounted for 31% of all sales in Cork’s southside in the year to August 2019,accounting for 363 transactions.
It is a significant segment of the market but it is worth noting that the area covered includes the likes of Douglas, Grange and other parts of the county that would not typically be considered city centre. Most of them now come under the auspices of Cork City Council but they are not traditionally urban areas.
Mr Downey says the market in the traditional city core is dominated by single professionals and investment firms.
“For a single professional, the city centre is where they want to be,” he says.
These non-occupiers accounted for 21% of sales in the year to date but have been involved in some high-profile deals in the last 12-18 months, including the purchase of the Elysian apartment tower by Kennedy Wilson.
The deal, announced in March 2018, was for a reported €90m and was the biggest foray into the Irish market by the US property player to date. Mr Downey notes the arrival of a new player in the market in the last 18 months, too.
“The parents of kids going to college,” he said. “Instead of putting down huge money on rent, some of these are buying properties, letting their own children live there on low rent or free of charge and renting out the remainder to other people.”
He said it has emerged in the area near UCC, with Bishopstown, Glasheen and College Road seeing a number of such transactions, with the buyers largely coming from the wider county or further afield such as Co Tipperary.
He said that many of the buyers have already cleared their own mortgage and are paying for these properties in cash. The lack of supply of apartments in the city is undermining the market, though, with big planning decisions due in the coming months on some ambitious proposals which will change the outlook for the city.
On Horgan’s Quay, there are proposals for hundreds of new apartments as part of an ambitious scheme also including a hotel and grade A offices. The developers had planning consent for 216 apartments but have sought to increase the number on offer to 302, with a decision by Bord Pleanála due by December 1. The scheme is being built on a six-acre site overlooking the River Lee and right next to the city’s railway station.
A second scheme for 118 build-to-rent apartments near the Elysian on a site bounded by the South Link Road, Rockboro Road and Gasworks Road is also before Bord Pleanála, with a decision not expected before the start of December, while a third major proposal will be submitted to the planning board in the coming months and includes 201 apartments on the site of the former Sextant Bar on Albert Quay.
Planning was also granted last October for an apartment tower of more than 400 units at Jacob’s Island in Mahon but, a year on, it has not moved. Mr Downey said such proposals are obviously welcome as apartments are desperately needed.
“There has been nothing new in a long time,” he said. “It is badly needed. I think they would fly out the door if they were built.”
Mr Downey said that the profile of the city centre buyer has changed.
“We get an awful lot of enquiries from European workers living in the city. French, German, Italians, all working for big companies like Apple, Amazon, Facebook and so on. They have been here for a few years and they see how things have gone in terms of rent and they realise they will spend less on a mortgage,” he said.
Access to public transport is a particularly attractive proposition for these buyers, he said.
On the southside there are many strong areas. Around UCC, CIT and Cork University Hospital, property is always snapped up quickly, with agents reporting no sign of a slowdown. As well as access to a number of huge employers, many see these properties as ideal investment proposals for the huge student population in the private rental market.
While there is a vast amount of student accommodation under construction in Cork City, currently purpose-built student developments are over-subscribed and students are taking their chances in the private market.
Bishopstown, Wilton,College Road and Magazine Road remain in high demand when it comes to buying investment properties, but this is now also increasingly a factor in areas such as Glasheen and the Lough.
On top of this, demand remains strong in the high-end market, traditionally the first to feel the chill of a cooling property market. Mr Downey says areas such as Ballintemple, Ballinlough and Blackrock remain in huge demand, with high-end properties continuing to be snapped up as soon as they hit the market.
The lack of completed new developments is forcing many first-time buyers and young families to rethink where they want to buy. Many have been forced to look outside the city centre into the suburbs and towards towns like Ballincollig and Carrigaline.
The figures tell their own story. In Carrigaline, where the average property price is €290,000, first-time buyers account for 38% of the market. Non-occupier investors account for just 8%.
And, aside from a blip in February, the number of new properties sold each month has remained strong, even exceeding the number of existing properties sold in July 2018. There is a similar story in Ballincollig, which now comes under the remit of Cork City Council and may find itself in even greater demand in the coming months and years.
Almost half (42%) of properties sold this year in Ballincollig have been to first-time buyers and that demand remains strong. In April, queues formed overnight outside the in-demand Heathfield Estate, with 27 houses bought in under an hour in scenes reminiscent of the Celtic Tiger. The median price for Ballincollig houses in the first eight months of the year has been €300,000, well above national averages.
In July, new house sales (17) outstripped existing house sales (14), only the second month since 2010 where that has happened, the other being October last year. Despite this, it is the same story for many of the new large housing developments as it is for the new apartment projects in the city centre.
A proposal for more than 470 houses on Carr’s Hill near Douglas has been referred to Bord Pleanála and may be some years away from completion, while work has yet to start on a nearby proposal for 251 units at Cooney’s Lane, Grange. There is significant demand for the Crawford Gate development off Skehard Road, Mahon, too.
Two phases have been released to date, with 20 units sold in phase one and a further 12 in phase two. Prices were between €325,000 and €365,000, and 200 people came to view a selection of show houses in early September.
So, despite talk of a downturn in the property market, demand remains strong in Cork’s southside, with younger buyers in particular increasingly looking beyond the city centre for homes while new developments await approval.