Development is welcome in a market where with an undersupply in affordable homes, says Cian O’Donoghue.
Much like a large and complicated machine the Irish residential property market has a multitude of moving parts that must each function correctly for the machine to run efficiently.
Like all big machines, the market also takes time to build up a head of speed but in 2018 we saw a notable acceleration in one of these moving parts, new homes.
2018 has been yet another year of record rental inflation nationwide.
The Daft rental report for Quarter 3 threw up two striking statistics.
Current asking rents in Ireland are now 30% higher than their previous boom time peak and the year-on-year inflation is above 10%.
This translates to an average asking rent of €1,300 per month in Cork, a 13.7% year-on-year increase.
This contrasts with the recent statistics from the Residential Tenancies Board which highlighted a moderation in the pace of rental growth and an average rent in Cork city of €1,172 per month although this includes older tenancies that are subject to the rent pressure zone cap.
With rent payments ever growing and increasing over and above salary growth, the desire to avoid paying ‘dead money’ on rent also increases and the aspiration for home ownership comes more into focus.
In their most recent mortgage approvals report, the Banking and Payments Federation of Ireland stated that the volume of mortgage approvals increased by 4.5% year on year with 47% of the applications from first-time buyers.
Mortgage funding is akin to the fuel that runs an engine and an increase in mortgage approvals is a definite indicator of increased demand.
To service this increased demand for new homes, the market has begun to react, but it is a slow process.
The timescale for a new homes development from initial planning application to completion is measured in years not months, although the Government’s fast-track planning scheme is a welcome addition as its aim is to minimise the time a new development spends in the planning stages.
According to the CSO, the third quarter of 2018 delivered 4,673 new dwelling completions nationwide, compared with 3,786 completions in the same period last year, an increase of 23.4%.
This brings the total number of new dwellings completed in the first three quarters of 2018 to 12,582, an increase of 27.7% to 2017 where 9,856 dwellings were completed in the first three quarters of that year.
In Cork City and County alone 1,402 new homes were constructed in 2017 but with 1,250 units being constructed up to Q3 this year, 2018 looks likely to outstrip 2017 delivery levels.
While this increase in new home completions is welcome, it is coming from a low base and it is well below the level of demand.
There was increased new homes construction activity in Cork city’s suburbs during 2018.
Rosefield, a development of 19 houses on Model Farm Road was launched early in the year.
Nearby, construction of the Steeple Woods development of 27 houses by O’Flynn Group is well advanced and is over 50% sold.
Aylesbury, the long-awaited development of the former Eir site at Churchyard Lane, Ballintemple was launched in October and it includes 74 units ranging from two-bed apartments to four bed detached.
Further phases of the large Janeville development in Carrigaline were completed and there are 70 sales recorded on the Property Price Register for 2018.
O’Flynn Group has planning for a 600 unit new development at Ballinglanna, Glanmire and construction has commenced.
Closer to the city, new homes were completed at The Avenue and The Crescent in Blackrock’s Eden development, with 33 sales recorded.
Remaining lands at Eden with planning permission for 141 residential units were acquired by Glenveagh Properties.
Also in Blackrock a new development of 65 houses at Crawford Gate was launched late in the year with sale prices starting at €320,000.
To the south of the city, construction of the Ruden Homes development at Manor Farm, Lehenaghabeg continues and there are 22 sales recorded on the Property Price Register.
Glenveagh Properties recently acquired a site with planning permission for 198 units at Maryborough Ridge, Douglas and construction is likely to commence in 2019.
Cork City and County Councils have also ramped up the delivery of social housing with a number of developments under construction.
All this new residential development is very welcome in a market where there is undersupply, particularly in affordable homes.
2019 is likely to see the machine move up a gear.
Cian O’Donoghue is a residential n agent with Lisney Cork