Focus on country homes

There are encouraging signs of an appetite for Irish country house, writes Michael H Daniels

ALTHOUGH acknowledging the Irish economy is in rough shape, the New York Times commented this month that many are pointing to us as a model for how to get out of trouble — as Europe’s leaders scramble to overcome the continent’s debt problems.

Recent praise too from Merkel and Sarkozy… “an outstanding example” and “almost out of the crisis”. A nice change for us to be perceived as anything but an economic basket case fit only for ridicule. Then again, we had obligingly just coughed up billions when ‘asked’ to by our friendly European bank bondholders, who had helped us make that same basket with decades of cheap credit.

All markets crave stability and we are showing the world that we are willing to take the hair shirt, just as the Greeks have shown they are not. The medicine has been beyond unpalatable, and the human cost brutal, with a real threat of too much damage being done to the economy with so much belt-tightening.

It is stability that breeds confidence and there is a real sense that if the eurozone debt crisis can be solved, the scales could tip from property bust to property opportunity.

It is hard to imagine that there are prospective international buyers looking at buying in Ireland — as we suffer with flagellation and penance for our collective sins — but there are signs of an appetite for Irish country property returning from home and foreign shores.

Dr Sean Kay, a professor of politics at Ohio University and the author of a recent book examining our crisis, was also quoted by the New York Times — “The Irish are being praised for doing what they were asked to do, which is important for bringing investors back to the country“.

In an undoubted statement of confidence, a highlight this year was the sale of Coolmore House in Kilkenny (pictured) with 250 acres for a figure believed to be in the €3.25 million region to a Hong Kong businessman. To invest such a sum in a shattered market takes courage, yet the buyer and the vast majority of agents would agree that this deal was excellent value for money.

The ideal of a Georgian house with acres is still alive for those with necessary funds and footloose aspirations. Those with Irish blood abroad and who still dream of a return are now moving to take advantage of the huge reduction in prices which have seen entry levels plummet from around € €1.5m to €500,000 for a good period house with some acres.

Prices at the top end of the market have fallen with jaw dropping speed for three years………down 25% in Dublin in the last year, according to Knight Frank’s Prime International Index, some way behind Dubai where values fell by 10%. We are now at levels where the attraction of purchasing is perceived as beginning to equal if not outweigh the risk of further falls.

The agricultural land market is tied closely to the country house market. In marked contrast, 2011 may well be seen as the year in which land prices bottomed out as there is plenty of evidence to suggest that they may come back strongly in the coming year. The mattress money salted away prior to the crash and sitting idle since is beginning to find a home again in land — the alternatives are far from attractive, as few of the certainties in life remain untouched by the current recession.

The herd mentality hard-wired into all of us dictates that we buy when everyone is buying and sell when everyone is selling. However, it is the clever money that manages to jump the circuit, and there are indications that there is a gathering demand building for country property.

This has yet to transform into visible sales data, but it has always been difficult to read the sector due to the peculiar qualities pertaining to it even in ‘normal’ as the country house market is able to operate where a sizeable percentage of properties for sale are not actually advertised or promoted to the open market.

Foreign buyers are almost always surprised by this, expecting a plethora of opportunities such as those which adorn the glossy pages of the UK bible, Country Life. This off-market approach, where perhaps as much as 60 % of the available stock is not offered to the open market, has always been an important facet of the country market, but the proportion offered via the private market has shot up in recent times for a number of reasons.

The main reason is that sales can be achieved this way and it is certainly less painful if a bid can be achieved in confidence. The market is very thin with an overall stock of few properties in the prime areas of demand; as compared to other European countries — it is also very specialised in terms of agents who actually cover the market.

To be on the market is often seen as weakening one’s position with an almost automatic but incorrect assumption that there is pressure to sell. The risk of being stuck on the market, in full view for a considerable time, is not a pleasant prospect as is the probable attraction of overzealous parties wishing to press unwelcome ‘distressed-auction’ level bids.

It takes courage and perseverance for foreign buyers to find and buy here, where things are rarely certain, even for initiated big-hitting buyers used to negotiating on their own terms. Both parties are hampered by the lack of a price register, which can serve only to erode the confidence of both parties to deal — often vendors are reluctant, casting nostalgic glances to the past whilst buyers try to bring their ‘buyer’s market’ hardball ‘A’ game into play. The off-market property often has no official price whilst the buyer has little or no on-market evidence against which to weigh an offer.

This leads to considerable casualties amongst overseas buyers who are defeated by this process. There is too little clarity for them, coupled with the unrelenting backdrop of negativity they encounter from many advisors. Undoubtedly the fall in house prices has been exacerbated by a lack of facts and figures — just as the crazy rise in the bubble years was. The price crash is also now in danger of becoming a self-fulfilling prophecy, whereby those who cannot see an end to the fall in prices will surely ensure that this is the case.

Although some of the cloak of secrecy will be lifted by such a move, the setting up of a property price register will be a most welcome development and can only instil confidence and trust in the market at a time when it needs it most.

- Michael Daniels is the principal of Michael H Daniels & Co., country house specialists, based in Fermoy, Co Cork.

www.michaelhdaniels.com