Despite faltering economy Cork house prices expected to rise 7%

By Tommy Barker

A slowing economy, war, rising unemployment, a drop in rents unsettling investors and the fear that future interest rate hikes would wipe out many hard-pressed buyers have all cropped up as reasons to be cautious.

Yet, buyers in major areas of population are still flocking to property purchases, buying off the plans in Dublin and storming showhouses in other cities, with lending institutions’ pre-approval cheques in hand.

Despite the prophets of doom, a property briefing in Cork this week heard that the house market this year will be steady.

While accepting that investors are stepping back from the residential sector except in prime city locations, CB Hamilton Osborne King residential director Peter Cave said that shortage of house sites in and around Cork city would hold up prices and even increase them slightly.

He made his forecast at the Gloom or Boom? Property Outlook 2003 seminar this week in Cork, and argued the prospects “are for neither gloom, nor boom, but for a good, solid market this year.”

Mr Cave told a HOK client breakfast briefing that continued net immigration, a demographic need for new homes and cheap money would keep the housing sector on course this year.

However, areas suitable for residential zoning were not zoned in the Cork County Development Plan, with first-time buyers forced to out of town locations with high commuting costs, he said.

“Despite recent warnings in the media that house prices are slowing down and might even decline, we believe the trend of increasing house prices will continue in Cork,” said Mr Cave.

Since the beginning of the year house prices rose by 3%, and by an even higher margin if pre-Christmas rises were factored in.

“Planning permissions are taking too long to come through the system. Those involved in the process must do their utmost to ensure that permissions are dealt with as quickly as possible in order to increase the supply and therefore keep prices stable. It is in the interests of developers and consumers alike that there is stability in the market long term.”

First time buyers have been asked to move further out to the outlying towns and pay the commuting costs and this is the sector of the market that can least afford these costs.

“It is important that a high quality low costs transport system is put in place to ensure that the development of these towns is sustained,” he said, as a Government rail study showed that both the Blarney and Midleton rail lines in Cork could be profitable routes but did not commit funding to re-open them.

“This year will see a continued easing in demand from investors other than in the very prime residential areas of Cork where investors are assured good rentals.

"Rental demand had also eased primarily because of the reduction in the number of companies opening in Cork. But due to good medium term growth the investor will still be a player in the market this year,” said Mr Cave.