Property market defies the pundits

PROPERTY buying is all about budgets - and Charlie McCreevy has kept the Irish property market afloat with his last two budget bites.

The year just ending defied the doomsayers expectations, those who said the market was going into freefall and that prices would slump.

House-building, already at record construction levels, came back on a high note, with sales outstripping building speed and low interest rates keeping the whole show on the road.

Following the changes to social and affordable housing legislation and the builders bullying their way through with amenable Mr McCreevy, supply is going to go even stronger next year - at least for the private buying sector, and certainly pent-up planning applications are likely to flood planners who found time on their hands this year.

And, with confidence restored and little outlet for investors other than property, prices not only kept up in 2002, they jumped up.

This time a year ago, McCreevy threw a lifeline to the residential market when he rowed back on the anti-investors measures introduced after three Bacon reports.

Investors flowed back into the market, leading a surge of demand which had private buyers realising they had to follow swiftly after.

Those who lagged behind in buying may have ended up by year’s end paying 10 to 15% more for a house purchase than a year ago, and in some cases new house schemes saw their cheaper product increase in price by 15 to 20%.

Themost buoyant sector of the market was the starter home area, and homes generally priced below the 175/200,000, level, with higher thresholds in urban areas of strongest demand.

Investors competed strongly in this market, taking up about 20% of new and second hand stock, and given a financial swagger by lending institutions who rushed to tempt with Buy to Let packages.

However, with supply passing out demand for rental stock and the employment situation dipping, rents dropped back from their uncomfortable high by as much as 20%

Cuter investors will realise that not all rents will pay mortgages over the next few years. The old adage about location will shore up many purchases, but investment properties in secondary location will have a rocky ride in 2003.

Not all sections of the market rose equally: Cork new house prices rising further and faster than the national average was one notable marked Winter house price survey finding.

Again, Dublin saw the biggest increases as the capital city continues to swell, ballooning like some appendage with fluid retention.

It is an issue the finally-released National Spatial Strategy (NSS) seeks to redress, by designating its list of gateways and hubs. Yet, at the end of the day, or more realistically the end of this decade, the proof of this NSS pre-Christmas pudding will be in the political domain.

Government must decentralise massively to the newly designated areas and foster investment.

Given that they already weakened the impact of the vitally needed strategy by designating too many locations, what’s the betting some areas which were not designated out will get a sop of a decentralised function or US investment, thus further undermining the thrust of this masterplan?

And, in any case, as the country’s commercial market discovered as it slowed considerably through 2003, all the strategic and grandiose planning in the world makes little difference when an investment tide is at low ebb. For the NSS to have maximum impact, it should have been delivered two or three years ago in line with National Development Plan, when the country’s coffers were awash with cash.