Prices stable in resilient new homes market

NEW HOMES special report: Ireland’s robust new homes market is showing no signs of Covid weariness, writes Tommy Barker, Property Editor
Prices stable in resilient new homes market

Positive signs: With the essential demographic forces largely unchanged despite the tumultuous year we are enduring, there’s going to be underlying and indeed growing demand.

The robust nature of the Irish property market in this extraordinary pandemic year continues to engage, and that’s as true for the New Homes market as it is in the wider front.

Our desire for a place safe place/sanctuary, to call home remains undiminished and the latest reports show prices holding up, while activity levels are, not unsurprisingly, down on last year’s sales and deals.

Online listings show as much as a 25% drop in housing volume coming to market for sale, and that surely is a factor underpinning values: it’s quite simple supply/demand economics.

Eyebrows raised a bit with last week’s release from Myhome.ie which showed that asking prices on new property listings were up 5% in the third quarter of 2020.

But that’s probably indicative of a fair amount of flux given the Q2 figures was minus 3%: there’s no bubble, as Davy chief economist Conall MacCoille, noted in an advisory note with Myhome’s Q3 figures.

As notable, there’s no ‘crash fears’ evident in current buyer sentiment, with home hunters appearing to take the long-term view, especially if they are currently paying rent, or in unsuitable or unsatisfactory accommodation.

With the essential demographic forces largely unchanged despite the tumultuous year we are enduring, there’s going to be underlying and indeed growing demand.

While the issue of housing is a Government priority post-election outcome and the protracted Government formation (seems like years ago now?) it is naturally enough going to take somewhat of a back seat in terms of speed of delivery be it social homes, affordable options and straight market sales.

Government’s awareness of the broad housing issue as part of the economic impact of Covid, and the challenges posed to the construction sector, were acknowledged in the summer’s Stimulus Plan when they enhanced the existing Help to Buy scheme for qualifying purchasers of new builds.

It’s now worth up to €30,000 to buyers in tax rebates, on properties worth up to €600,000. But, the enhanced incentive is due to expire at the end of this year, and the overall Help to Buy Initiative is due to run its course in December 2021….unless extended in the forthcoming budget?

The Society of Chartered Surveyors of Ireland last week called on Government to give the building industry which employs 148,000 (CSO figures) a longer-term commitment to the Help to Buy scheme to enable forward planning and funding, at a time when build and tender costs continue to escalate.  Covid-19, and lockdown talk, is impossible to ignore, and the past summer’s surge in housing demand in some respects came as much because of as despite, the virus.

“There was pent-up demand during the lockdown,” says residential director with Savills Cork, Catherine McAuliffe as she, along with numerous other estate agents, both national and local, report vibrant activity in new house transactions.

“There’s just not enough stock to go around,” she continues, “we’re waiting for builders to catch up,” and she remarks on active building sites going at full pelt, albeit with observances on social distancing and increased health and safety measure on-site.

The level of activity won’t go unnoticed by anyone out and about, with builders and tradespersons vans and lorries seemingly in every suburb and settlement. Like other agents, Savills have waiting lists and many, many registered inquiries for their next releases in popular schemes and in strong locations, such as Heathfield in Ballincollig.

The same sort of message is echoed by Paul Hannon, New Homes Director with Sherry FitzGerald Cork, outlining strong sales figures in this most extraordinary of years.

The company nationally has over 1,100 sales to date by the end of Q3, and in Cork Sherry Fitz records 260 agreed sales (145 closings) in 2020, with over 180 since lockdown in March.

Agents report very strong figures for the months of July, August and September, but, again, this may well be the catch-up phenomenon at play.

Davy’s Conall MacCoille has said that a year’s third quarter is “is normally a weak one for pricing, capturing the end of summer selling season – which has been delayed this year.” He feels Q4 will see a fall-back from Q3’s strong 5% hike in asking/list prices, while after a series of releases in recent weeks Sherry Fitz’s Paul Hannon reports “pricing levels have remained the same, and in most cases pricing has increased marginally for new Autumn phase launches.” 

Assuming that building sites are not drastically negatively affected by any step-up in Covid-19 restriction levels (moving to Stage 5 also obviously affects all property visits/viewings) the next few months to the year’s end may be expected to continue the trend and activity levels since June, with First Time Buyers (FTBs) accounting for 70% of all new house sales.

The enhanced Help to Buy scheme with benefits going from 5% to 10% ‘til December 2020, “is particularly relevant in Cork, as the price point that benefits most from the enhancement are properties priced at the €300,000 level (doubling of the rebate.) It has mobilised and motivated another group of First Time Buyers," according to Paul Hannon.

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