One of the effects of the pandemic was for people to re-think the idea of location. Traditionally speaking, location has been a vital element when looking for a home. The pandemic forced companies to set up remote working for their employees and, now that many of them have discovered that it can work perfectly well (though not in all industries, obviously), location has become a much more fluid phenomenon.
This is marked change in direction from the years immediately after the downturn of 2008-11, when people were deserting the quieter outlying areas in favour of more central locations in city and town centres or in areas that were convenient to their workplace.
“We have found that people are less area-specific,” says Elizabeth Hegarty, Associate Director, Residential of Savills, Cork, “so we might have one person enquiring who could be looking at four different developments dotted around Cork, whereas before, you would have seen it more the case where people were being area-specific in their search. Now, those people do still exist, of course, but some people are casting the net a little wider, in the hope of just securing a home full stop. Or alternatively, finding the best value for money.”
“It is a big thing, this phenomenon of people coming from the cities and deciding to buy in the countryside,” says IPAV CEO Pat Davitt. “Property is still cheaper in the more rural locations and if there’s broadband in the area, they can work from home maybe five days a week… The critical thing is the provision of broadband. Broadband is as important in rural Ireland now as electrification was in the 1950s.”
“I know, from talking to lenders over the last year, they have never been so busy as they are now,” says Elizabeth Hegarty, Associate Director, Residential of Savills, Cork. “The amount of people that have been saving more than ever has really grown over the Lockdowns. The last year and a half have, unfortunately, been a real test for everybody but on the plus side, it has enabled all of us to save some money, whether that’s for buying a house, renovating or trading up to a house.”
According to Pat Davitt, CEO of the Irish Professional Auctioneers & Valuers (IPAV), the Central Bank’s position needs to change to allow more First-time Buyers get on the property ladder and away from paying high monthly rents to institutions that are often based outside of Ireland.
“We’ve been calling on the Central Bank for some time now to amend the macroprudential rules to allow people buying property for the first time to be able to borrow more money because the 3.5-time-ones-income figure is too small... We believe that that figure for someone earning up to €50,000 a year is far too small to have a chance of buying a home because most of the new 3-bedroom semi-detached homes throughout the country are €250,000 - €300,000… We’ve been asking the Central Bank for quite a while to change the Mortgage Allowance from three-and-a-half times to four-and-a-half times the salary.”
IPAV’s appeals have, so far, been falling on deaf ears. The Central Bank’s argument has always revolved around their unwillingness to allow too much credit in the marketplace, saying that this will lead to accelerated inflation of house prices. This is a particularly sensitive point, considering what happened during the downturn of 13-14 years ago. Pat Davitt counters, however, that it matters little to those looking for a home who are currently paying high rental rates:
“What we’re saying is that, regardless of the fact that house prices may increase, you’re either going to pay one way or another: you either pay for the increased value of the house or you pay for a continuation of the rent.”
Pat underlines the point by mentioning the case of a couple in Stepaside in Dublin, for whom he recently closed a sale. They had been paying €2,200 per month in rent, whereas now they’re paying a mortgage of €900 per month.
Furthermore, he adds, not only is there €1,200 less being paid by that couple, they now have that money to spend in the local community instead of potentially paying it out of the country and the fact that they’ve vacated their rental property means that there’s one more property available on the rental market.