LAST year I wrote about the Cork property market showing its mettle in these end of year pages: little did I know, just how hard our society would be tested within a few short months. Like our society, our property market has shown exceptional composure and resolve in the past nine months to meet the challenges foisted upon it in 2020. When we think about the open market in property, we consider the effect of interest rates, mortgage availability, cost of renting and employment figures.
These key factors undeniably affect the values of property and the number of transactions each year. Since 2015 we have transacted about 6,00O residential sales each year in Cork. This year, somewhat remarkably, we will transact approx. 5,000 sales in Cork. These figures are a strong reminder that the market at its core is driven by those who partake in it, willing buyers and willing sellers.
Both groups showed an exceptional capacity to continue with their plans in 2020 and in some cases bring their plans forward.
The main obstruction to sales this year was not the pandemic itself but the restrictions that had to be put in place around travel and a worryingly low, lack of supply of both new and secondhand property. Demand is likely to remain robust into 2021 and in part, this will be driven by a continued low supply of residential property to the market.
The first-time buyer remained the biggest market participant in 2020 showing a strong preference to buy new. This sector continued to be driven forward by the Help to Buy (HTB) scheme.
Trader-up activity rose sharply in the latter half of the year with many deals being made in the last quarter of 2020. This increase in activity and the sense of urgency expressed by these buyers can be attributed to the pandemic. Growing families and the prospect of remote working, at least in the short term, has promoted many speculative market observers into action. Whilst a large number of market participants in this sector had plans to move or potentially extend their existing property, few saw themselves going about it so soon. Unsurprisingly, viewing numbers declined in 2020, but the number of bidders on secondhand property remained largely the same as the previous year.
It was the upper end of the market, in particular coastal homes that stood out from the crowd attracting interest from both Dublin-based and overseas buyers. Our office dealt with a noticeable increase in inquiries from international buyers in 2020. Buyers from locations such as, mainland Europe, Hong Kong, US, Canada, Australia, and the UK.
Savills' Cork office oversaw eight €1m plus sales in the Munster region in 2020. When speaking to these market participants a similar tone emerged, they always intended to buy a home to either relocate to or to establish a part-time base in Ireland and the events of 2020 simply gave them the impetus to put these plans in place sooner.
This trend of thought is likely to continue into 2021 with a number of new and focused buyers coming into the market in recent months.
PRICES in 2021
2020 saw prices continue to increase in Cork. The new homes sector saw modest price increases throughout the year while resales saw some of the highest increases in value. These increases were mostly seen in prime areas where resale supply became even tighter encouraging bidding scenarios, with asking prices often being exceeded by up to 10%.
To this end, it is worth bearing in mind the reduction in the number of transactions this year in comparison with previous years. This is not insignificant and is likely to encourage prices to grow further in 2021.
Whilst supply remains an issue and fundamentals such as low interest rates, mortgage availability and high rents remain in place - demand is likely to continue at a steady pace as seen in previous years.
As a consequence, current pricing is likely to be maintained in all sectors with prime area sales continuing to attract multiple bidders and experience further price increases.
As 2021 progresses and we finally get to grips with the pandemic - as is anticipated - we are likely to see supply lift towards the end of the year and into 2022.
Whilst in 2019 the Cork property market showed its mettle, in 2020 we have witnessed both our property market and our society galvanize. We now face into the year ahead together with shared optimism and with reasons to believe our market is made of steel.
Michael O'Donovan is a director with Savills Residential Cork