Location is certainly high on the list of importance, but 2015 buyer feedback suggests location has been overtaken by affordability, says Michael O’Donovan.
The 2015 Cork residential property market saw a robust return of confidence in property across all sectors, with the first-time buyer and executive homes market showing particularly healthy levels of activity.
Purchasers are now ready to buy when properties are within budget and located within easy reach of amenities, public transport and access to the link road network.
The overall sentiment amongst buyers as a whole was very positive, being comfortable in relation to current pricing levels and safe in the knowledge of a steady increase in their investment into the foreseeable future.
However, this positive sentiment was stymied by the lack of supply of good quality newly-built homes located in well-serviced locations as a result of low construction levels in Cork City, with 2015 seeing construction levels in Cork City fall below 2014 output.
Such low levels in supply of new homes in Cork City and parts of Cork County, coupled with the new Central Bank’s lending restrictions, has unfortunately put the pause button on creating a harmonious market of steady supply and sustainable price growth.
A number of house developments and site completions saw good sales activity for a number of estate agents, developers, receivers and Nama last year, and activity in 2016 should build on this movement.
In 2015 Savills Cork released two new home developments, the first in Ashmount Mews, Silversprings consisting of two- bedroom apartments and three-bedroom townhouses ranging in price from €125,000 to €178,000; both phases sold out within days of release.
The second in Maryborough Ridge, Douglas consisted of two-bedroom apartments, three-bedroom duplexes, three-bedroom townhouses and four bedroom semi’s ranging in price from €160,000 to €430,000. Phase one has sold out with only a few select units left in phase two.
First-time buyers seemed eager to purchase if a property remained within budget, with the majority of such activity taking place in the sub-€250k category. When it came to the first-time buyer, we noted very little impact in terms of the Central Bank’s new rules. In fact first-time buyers were highly motivated due to a number of factors such as visible price increases as seen on the Property Price Register, increased rents and interest rates on mortgages remaining low. Savills foresee this trend continuing into 2016. Location is certainly still high on the list of importance, but 2015 buyer feedback suggests location has been overtaken by affordability.
For first-time buyers spending in excess of €250k for a bigger home in a more mature location, parental assistance was part of the purchase which promoted the buyers in some cases €50k - €100k beyond mortgage achievement.
Whilst most of the first-time buyers Savills sold to in 2015 were Irish, there was a steady increase in foreign purchasers resident in Cork via companies such as Apple, EMC and UCC. Such buyers were mostly active in the city centre apartment sector of the market.
The investor in the Cork market was most evident in the sub €300k sector. The end of the Capital Gains Tax exemption in 2014 saw a cooling off in this sector, with investors not as competitive in bidding scenarios.
More often than not the investor was out-bid by owner occupiers. Investor activity is likely to increase in 2016 due to continued low interest rates and strong rental demand.
The growth in the first-time buyer market has put selling back on the menu for those looking to trade up from a three or four bedroom semi into a mid-sized family home. As a result, the trading up sector saw a strong level of activity.
The year began with an overhang of ready buyers who had sold or relocated back to Cork and required low loan to value mortgages due to high cash deposits.
As did other agents, Savills noticed a very strong appetite to trade up within the Cork City market but due to a lack of supply and the stringent Central Bank’s lending conditions being felt most in this sector, is likely to remain at a similar price and transaction level in 2016, I feel.
The executive homes sector in Cork saw a substantial increase in activity coming from a low base in 2014. The €1 million plus market in Cork in 2015 was the most dynamic and reassuring of a return to confidence in Cork’s property market (see results Pages 4-5).
Irish buyers who had in the past been somewhat reluctant from entering this market segment are now very active in seeking the home of their dreams. The ex–pat buyers have also become a prominent feature of this market, often with Sterling bank balances, and are actively viewing and bidding on some of Cork’s finest homes.
In 2015 savvy vendors recognised this trend and brought their homes to the market resulting in a strong calibre of available homes at the upper end. Demand continues apace, with a number of emerging buyers making themselves known in the past six months. As a result, this is a sector which is expected to continue on its current trajectory well into 2016.
* Michael O’Donovan is senior residential negotiator with Savills Cork.
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