‘Incentives for buyers must be backdated’

ANY budget changes affecting construction or property deals should be backdated to today to stop the market going into paralysis.

The suggestion comes from Alan Cooke of the Irish Auctioneers and Valuers Institute, who also said the Government should consider taking an equity stake in future house purchase, as a 10-year or long-term investment to restore confidence in the market.

Property deals could stall between now and October 14, as buyers will wait to see if any stamp duty changes are made or other incentives to stimulate the market are introduced.

“We’ll be sitting on our hands and contracts will be sitting on solicitors’ desks until after October 14,” said one estate agent as the market remains slumped.

However, any changes which may be introduced should be backdated to allow the market to continue to operate, said Mr Cooke.

“The last time there was talk of changes to stamp duty, there was 18 months of relative inactivity as buyers stayed out of the market,” he said, suggesting that buyers should get assurances that any beneficial changes would be backdated.

“If they can get the money, they should go out and do it, knowing they won’t be any worse off. In fact, they could be better off because if there are incentives in the budget, there will immediately be more competition from other buyers.”

Mr Cooke suggested the Government could also stimulate confidence by taking an equity share in house purchases, even in the current declined market.

Property consistently performs in the long-term, showing growth over 10-year periods and longer.

He made his comments as two of the country’s big house builders produced financial packages to help intending house buyers bridge the lending gap between what are typically 80% mortgages and purchase prices.

The move is backed by the Construction Industry Federation and may be used by other developers.

Bernard McNamara, one of the largest house developers in Dublin and owner of several hotels, as well as Ray Grehan of Glenkerrin Homes, revealed selling strategies that include price cuts, and 0% loans of 15-30% of purchase prices.

The moves are designed to close the gap between selling prices, and the levels of mortgages banks are prepared to support.

Glenkerrin’s pitch is “own 100% of your new home and pay only 85% of the price now”, with the balance due to be repaid in seven years, or earlier if the property is resold.

It applies to schemes such as St Edmunds in Lucan, with prices starting from €235,000 and Ballintyre Hall in Dublin 14’s final phase, with prices from €395,000.

Meanwhile, another developer, Mr McNamara — who previously reduced apartment prices by up to 20% to €470,000 (when two-beds had been selling at €585,000) at Elm Park in Merrion Road — will provide 0% interest loans of 20% to 30% of purchase price, for five years.

Selling agents Hooke and MacDonald reported a surge of phone calls and site visits as a result. There are 70 units left to sell at Elm Park, of 330 in total.

Southern director of the CIF Joe O’Brien said he wasn’t aware of builders in his region set to follow suit, but said the move would be carefully watched.

He pointed out that developers here worked off cheaper prices than in Dublin, and had also introduced initiatives to stimulate sales. They include Rent to Buy schemes, off-setting rent against purchase options, paying buyers’ legal fees, providing furnishing packages and flexibility on deposits.

However, University College Galway economist Alan Ahern said developers will have to cut prices further, or have the banks cut prices for them.

Mr O’Brien said many builders are selling “at cost price, people are coming to accept that industry prices are at rock bottom”.

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