Cork's residential property shows resilience
The hunt for residential property held up duing 2020's pandemic-stricken year. Photo: Niall Carson/PA Wire
LIKE all aspects of life in 2020, the residential property market has faced significant disruption due to the COVID-19 pandemic. The outbreak of the virus has represented an unprecedented shock to the economy and to society, unlike any experienced in living memory. The necessary precautionary health measures taken earlier this year to reduce the spread of the virus have had adverse consequences for both the Irish economy and the housing market. However, while the impact has been extensive, the market has shown remarkable resilience despite the challenges COVID-19 has presented.
Since the onset of the pandemic, property values and buyer sentiment have shown extraordinary buoyancy. Following the implementation of the first national restrictions in March, it was widely expected that there would be a substantial drop in property values before the end of the year.
However, this did not materialise with prices remaining firm, even growing slightly in the year.
According to the Sherry FitzGerald house price index, the value of second-hand properties nationally increased by just over 1% nationally in 2020, with prices in Cork increasing in the region of 1.5%. This stability in house prices has been due to falling supply levels and robust buyer demand, with the help of governmental income supports and an increase in savings.
Despite the uncertainty in the market, potential purchaser’s commitment to buy has remained steadfast. A survey conducted by Sherry FitzGerald over the summer with over 1,500 respondents showed that 82% of potential buyers were either just as or even more committed to purchasing a property despite the uncertainty arising from the COVID-19 pandemic. This commitment to buy held across all age groups, locations, purchaser profiles, current accommodation circumstances and price ranges.
During the first lockdown, like a lot of industries, estate agents had to shift to remote working and the virtual world. While working from home provided challenges, the industry and Sherry FitzGerald showed adaptability and flexibility. Viewings went virtual and with the implementation of MySherryFitz, buyers were able to conduct much of the sales process online.
Due to the restrictions, there was an inevitable drop off in construction, although not as great as once feared. With sites closed for a number of months and working at reduced capacity since reopening, this has impacted output for this year and will likely impact next year as well. Sales have been steady and began to pick up over the summer months. With it very likely that the construction industry will be operating at a reduced capacity for much of 2021, the already insufficient stock levels will be depleted further, prolonging supply shortages in the market in the near-term.
Back in March, nobody could have anticipated how the market would perform for the year. With the easing of restrictions in June, there was an unexpected pick-up in activity. With robust enquires into the market, boosted by the physical reopening of branches and expansion of the Help-to-Buy scheme, viewing numbers and transactions steadily rose over the summer months. Coming out of lockdown, buyers were extremely focussed, and sentiment has remained strong to date.
Last year, while overviewing the market in Cork I stated that “There is no doubt that we still need an increased supply of all types of properties, rental properties, starter homes, properties to trade up to and equally important properties to trade down to. An increased supply will stabilise both price and rental inflation allowing us to remain the attractive city that we all know Cork is.” Reflecting on these statements a year on, unfortunately the challenges remain the same. While the housing market in Cork has shown tremendous resilience in 2020, an increase in the supply of all property types is much needed this year and in the coming years. Buyers, be they first time buyers, those trading up or down and investors are focussed, the market is resilient and with the roll out of vaccines on the horizon, we are cautiously optimistic for the year ahead.
Ann O’Mahony is residential director with Sherry FitzGerald Cork.
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