Despite portents of doom the great housing crash failed to materialise
THEY said it wouldn't happen, it wasn't supposed to but it did the Irish residential market once more picked up its skirts and ran, picking up pace with a 12-15% price inflation across the board during the year.
It was the year everything was supposed to slow, if not crash, if one was to believe the prophets of doom, looking to a glum backdrop of war in Iraq, jobs losses and the drying up of US overseas investment.
Yet, new house supply continued to rise to record levels, topping 65,000 units: while prices went to all-time high levels as well, record numbers of people still managed to buy.
Nationally, house prices now average €270,000, Dublin drags on the average with values there typically over €300,000 (second hand houses in the Capital average even more, about €370,000), while the average excluding Dublin is closer to €200,000.
Overall, Dublin values are up to 40% above other urban areas (our weekly Two Ireland's slot in these pages highlights the gulf), and the gap seems to be widening: decentralisation if and when it comes will see a windfall property bonanza for those shaking off the shackles of Dublin and its congestion nightmares.
The high house prices/record sales and construction output is not the conundrum it seems to be, as record low interest rates kept property at just-about an affordable proposition.
It is when interest rates start to rise, expected to creep up in 2004, that the real bite will start to be felt by this year's buyers, put to the pin of their collars on new multiples of their income to make mortgage repayments, and with two salaries or rent-a-room vital to making monthly mortgage commitments.
Almost €13 billion was advanced in the Irish mortgage market in 2003, and the value of the average new mortgage is now over €150,000.
New house production, at about 65,000 units, is the point where supply matches demand or even slightly exceeds it, so the likelihood is that 2004 will continue to tip the balance and finally and really reduce the pace of inflation to single digit figures.
(About 59,000 completions were of private homes, and about 7,000 were in the social housing sector, where output rose 25% during the year just ended. Home Bond registrations by year's end indicate a moderation in house completions next year).
Most upward price movement in house prices in 2003 was in the lower to mid market, the mid to upper levels saw a slowing-down in the rate of inflation, and vendors in this category hoping for a killing were in many cases forced to knock back their price expectations.
Meanwhile, the very top end saw millions changing hands for the very best properties, always in short supply and with clear evidence of accumulated wealth safely stashed away from the boom year of the now-comatose Celtic Tiger.
Cases in point were the clutch of €5 million plus sales in Dublin's traditional hot-spots such as Ailesbury road (number 38 made €6.5 million plus) in Dalkey, and Eddie Jordan's modernistic Killiney pad is still for sale for offers around €6 million.
In other Irish cities, top-end sales were also at record levels.
In Cork, a 10,000 sq ft Rochestown Road house made around €4 million and a sale was agreed on Mount Patrick in Glanmire for about €1.8 million. In Limerick the 6,000 sq ft Tudor House on Golf Links Road made €3 million, and in Waterford Carrigleigh House made a new local record, selling for just under €2 million.
In Galway a house on a valuable 0.75 acre site made €2.2 million, probably thanks to development potential, and a home on Threadneedle Road fetched €1.56 million at auction.
Land prices continued to escalate in every major urban area as builders acquired the raw material for future years' of building (eg land in Glanmire in County Cork hit a worrying high of €600,000 an acre in bids, as zoned supply dried up) and 2003 was also the year when the Fianna Fáil/PD coalition set up an Oireachtas committee to investigate the feasibility of introducing a cap on development land prices a move that will need a Constitutional change, given the reverential regard for private property in the Constitution.
The year just ending was also the year when the reality of impending development charges hit home: fears were expressed that local authorities would have levies from €5,000 through to €14,000 per house by 2004 when they are due to come into force. This highly controversial levy (now being challenged in the courts by the CIF) comes on the back of some 42% of every new house cost going into Government coffers, either in direct or indirect charges and taxes.
And, several years after the 20% Social and Affordable housing provisions were introduced, the slow nature of the Irish planning process means that the year ahead, 2004, is the time when this radical market intervention will begin to take effect in newly-built estates and developments. Finally, one of the burning issues of 2003 was the rift over one-off housing in rural areas. Expect to see it grow in 2004.
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