Mixed feelings amongst property agents around the true price of Covid impact

Property service providers are preparing to reopen their doors and start handing over keys on June 8.
Mixed feelings amongst property agents around the true price of Covid impact
The property industry is hopeful there will be a rise in potential buyers come June, to offset the decrease in housing transactions seen in the past couple of months.

Property service providers are preparing to reopen their doors and start handing over keys on June 8.

With business hampered by strict lockdown measures and social distancing rules, the industry is hopeful there will be a rise in potential buyers come June, to offset the decrease in housing transactions seen in the past couple of months.

KBC Bank Ireland has predicted that residential property prices will fall by 12% this year. Other experts have warned that the closure of building sites will negatively affect the speed of new home completion, meaning housing demand, which was already high, will rise even further.

However, there are mixed opinions in the industry. All agree that a global health pandemic is an unprecedented situation but are unsure how exactly it will affect the market.

Pat Davitt, CEO of the Institute of Professional Auctioneers and Valuers, is hopeful that on June 8, property service providers can start catering to members of the general public again.

A joint safety protocol has been released by the sector, outlining standard safety guidelines the sector and its clients must follow in relation to house viewings, sales, auctions, and valuations.

In terms of the sale of property, viewings will be appointment-only and online viewings and auctions will be utilised.

However, he doesn't think there will be an explosion of people purchasing houses online.

"I am not a believer that people will buy a property after only viewing it online. It's a good way to give people an idea of whether they like the property, and to get them to consider viewing it.

"But if it was me, I would not buy a property unless I saw it, I don't care what anybody says, and I think a lot of people would be like that."

He believes the outlook for the market overall is positive.

"Some sales have been happening and are still closing. New sales have been done.

"There is a lot of business to be done and picked up, because we haven't done [regular] business in 16 weeks. There's going to be a bit of a boost when the agents go back to work."

Mr Davitt does not believe there will be a 10%-15% drop off in property prices as predicted. "I think vendors are well aware of what the situation is and I think they have properties priced to sell them. I can't see a huge difference between the pricing of properties now and when we get back to work, to where they were pre-Covid."

However, TJ Cronin of Cork-based estate agent Irish and European said it will be hard to predict what will happen in terms of property prices.

"We are hearing it's going to be property devaluation by 10%, 15%... I think there will be price reductions, but to what extent I don't know."

Mr Cronin said people have contacted him looking to renegotiate prices because of the pandemic, some renegotiating upwards of 10%. However, not all cases are succeeding in their renegotiations.

"There are also a lot of deals going through the system which are not being renegotiated at all,” he said.

However, there is still demand for housing, which isn't going away anytime soon. "One thing which the pandemic has shown is the need for housing. I do think people will strive to have their own property, if at all possible for themselves,” he said.

He said emerging from the pandemic will be different to the 2008 economic crash, where the demand for property "vaporised immediately".

Mr Cronin is also still receiving enquiries from potential buyers on a daily basis.

"I hope when we return to work after June 8 we can actively pursue that new business, get to do valuation work, and start viewings following the new protocols."

As for virtual viewings, Mr Cronin believes people will still want to see the property in person. "I think an online viewing will be the first step they will take."

He also thinks some of the new safety protocols will benefit the buyers.

"It can only be one-on-one viewings. They now get to have sole time with the agent. In open house viewings, sometimes you could see the person who may have wanted to ask a question, but didn't because there was a crowd or they [were too shy].

"Nine times out of ten you'd be able to get to that person and give them the opportunity to ask that question, but there was always that one time where they left, or you ran out of time."

Sheila O'Flynn, managing director of Sherry FitzGerald in Cork, said that before the pandemic started, they were tight on stock.

"There haven't been any major price reductions yet, as supply and demand runs the market."

Ms O'Flynn said from St Patrick’s Day to Easter would be the most common time for properties to go on the market, and the lockdown hampered this.

"While the amount of properties going up on the market has gone down, this was due to the restrictions, but after June 8 viewings will start once again,” she said.

"We have still been successful with sales, and sales have closed, some entirely online, without people going to view the house. First-time buyers are used to buying online."

In terms of property prices, Ms O'Flynn said the impact will be wide-ranging. "Transaction activity, price performance and construction output have all been impacted in the short-term."

She added that the housing crisis will only become worse due to the slower completion time of new builds. "There were 21,000 new homes built in 2019, and this was already a shortfall of 12,500-18,500."

New builds are not the only area affected, according to Ms O'Flynn. "Across Ireland, second-hand home listings were down 40% in March. This will impact sales in the next half of this year."

Society of Chartered Surveyors Ireland chief executive Shirley Coulter said the industry had to quickly move to remote working and the online marketplace during the pandemic.

"We did a Covid-19 member impact survey at the end of April, it was across construction and property.

"At the time of the survey 52% of property firms had indicated they were using virtual technology or online bidding for property sales. Of those not currently using technology, 21% said they were looking to make virtual technology imminently available, and a further 45% said they were considering using it."

Ms Coulter said online and virtual viewings had been increasing prior to Covid, and they will continue on this trajectory. However, the human element cannot be underestimated.

"It's still key. The expertise and the local insight of chartered surveyors, agents, auctioneers and valuers can't be replaced by technology," she said.

Ms Coulter said it is also important to note that the demand for housing before the pandemic has not disappeared.

"While transactions have decreased, our survey showed there had been a 29% increase in the level of enquiries from prospective purchasers since the beginning of the restriction on March 18."

In terms of house prices potentially falling, Ms Coulter said there is a huge amount of uncertainty at the moment.

"The fact transactions have fallen means any impact on property values will only emerge in the months to come, and that will depend on the extent of the damage, how long the recovery takes, and the continued availability of finance."

She said one thing that's certain is that the shortage in housing supply which existed before the pandemic will become exacerbated now, due to the temporary halting of construction and building.

"New house completions might not be at the level required. The construction [industry] also has to follow social distancing as well."

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