It was a game-changing year for Cork’s residential market, says Sheila O’Flynn, MD of Sherry FitzGerald.
This year has proven to be a turning point for the Cork housing market. After six years of falling prices, price inflation has re-emerged most notably in Cork city. The first nine months of 2013 saw the first period of positive, albeit moderate, annual price growth in the Cork housing market since 2006.
Early indications suggest the Cork city market has grown by approximately 5% during 2013. The strength of price growth in Cork city and indeed metropolitan area is fuelled by a shortage of supply.
According to the latest DoE figures, 5,682 housing completions were recorded for the first nine months of 2013. This represents a 6% decline over 2012. Cork accounts for just 14% of the total, an historically low level of activity.
With a dearth of new construction activity, the market is particularly focussed on the quantity of stock that is actually for sale. The perfect storm of negative equity, tracker mortgages and no bridging finance has negatively impacted the quantity of secondhand properties available for sale in the country, and Cork.
As of July 2013, there were 5,742 residential units available for sale in Cork; but only 1.9% of the private stock in Cork city is available for sale. Such figures suggest an emergence of a supply pinch point, which could further impact price performance in the short term. An analysis of transaction activity reveals the market remains largely dominated by owner-occupiers; 79%. Furthermore, investors bought 20% of the properties transacted in the year to date.
Notably, 21% of vendors who sold their property through Sherry FitzGerald were selling investment properties, while executor sales accounted for 26% of the market.
First-time buyers remain a relatively active cohort, accounting for 23% of the properties traded in the nine-month period.
Cash is a driving force in the market with latest available figures revealing approximately 54% of all residential transactions in the first nine months were bought outright with cash alone. Cash purchasers include owner occupiers re-entering the market having sold their family homes some time ago, investors interested in achieving a strong yield and non-residents interested in attaining some of the value in the Irish market.
Looking at overall activity in the Cork market, there was a notable increase in the quantity of transactions closed in the first nine months of 2013. A total of 1,967 properties transacted in the Cork region. In comparison 1,678 transactions were recorded in the comparable period of 2012; representing a 17% increase in transaction levels. So it appears the Cork market has turned a corner and the years of falling prices appear to be behind the market. But, it would be foolish to suggest all locations will benefit equally. As in any recovery one can expect the most sought-after locations will enjoy greater price growth. Family homes are performing best, however, there is also evidence of price inflation in the apartment market in quality schemes in the better locations.
Looking to the year ahead it would seem that without any significant uplift in supply, that price inflation will remain a feature of the market in 2014. The potential for some further upward pressure is evident as consumers become frustrated by the lack of supply, leading to an increase in multiple bidding in sought after locations. As such there is a real need for the market to begin to deliver the right product, family homes, in the established suburbs to stabilise price inflation.
The continuation of the CGT relief for 2014 may result in a strong investor appetite, impacting on the apartment market. In conclusion it seems that 2013 was a game changing year for the Cork market and we are looking forward to 2014 with growing confidence.
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