The first thing to realise about the current trends in the new homes market is that they are all in the context of a series of extraordinary circumstances.
We’ve never experienced a pandemic before and we’ve never experienced the kinds of measures that the Government have introduced in their efforts to struggle with this phenomenon.
With supply of houses already in a very difficult place, the situation was exacerbated by shutting down the construction industry for most of the last 15 months.
What does matter is the here and now and what the future will look like over the coming year. Right now, the market is buoyant and the Government seems to be finally tuning into the housing needs of the Irish people. With measures already in place, those in power are also under justified pressure to try something new as well as reinstating the Help-to-Buy scheme; one of the most important measures for first-time buyers and the building trade that has been introduced in recent years.
“The market has increased since the 1st of January this year,” says Pat Davitt, CEO of IPAV (Institute of Professional Auctioneers and Valuers). “There’s absolutely no doubt about that and I’d say that it has increased by as much as 10%. That’s talking about three-bed semi-detached houses. For any one-off houses in sought-after locations by the sea or something like that, they could have increased by as much as 20%.
“There’s no doubt about it, but the market’s very good for private new home sales,” says Conor O’Connell, Director of the Southern Region of the Construction Industry Federation (CIF). “Right around the Cork metropolitan area, demand is going very high. Population growth is high, employment growth is high.
“In terms of supply, we built approximately 21,000 residential units last year. This year, we’ll just have to wait and see how the rest of the year goes before we can project with any certainty.”
“We’re very busy,” says Elizabeth Hegarty, Associate Director, Residential of Savills, Cork. “We had a very strong Quarter Four of last year but this year we’ve seen even higher demand and higher enquiry levels for new homes across the board. We also have a good few developments on the market, which is great.
"We’re obviously dealing with high volumes of people looking for new homes… What we’re finding is that the market is very active — probably the most active we’ve seen it in a while. We’ve got over a thousand people registered with us even since the start of this year alone for new homes, so that will give some idea.”
According to Elizabeth Hegarty, Associate Director or Residential at Savills, the Government’s Help-to-Buy Scheme is as important as ever to the new homes market and to the first-time buyer:
“We saw that felt really last year. It was a real driver for around July of 2020, when it was announced that it was going to increase to €30,000. This is a huge help for people. This is, in some cases, the difference that allows people to be able to go from a three-bedroom semi-detached house to a four-bed semi.”
The scheme is due to expire at the end of this year. While the hope and the expectation is that it will be renewed once more, there is no guarantee that this will happen. The annual nature of the renewal is a source of frustration to many — particularly at a time such as this one when there are such levels of heightened anxiety in our society and in our economy.
“All we can do is wait and hope that we’ll get an announcement later on in the year that it will be kept on into next year,” says Elizabeth Hegarty of Savills. “I think that, given the fact that the builders have lost so much building time in the last 12 months, it has also knocked on launch times so for that reason, people haven’t had the chance to utilise the Help-to-Buy Scheme during those periods.”
“The First Time Buyer’s Grant being extended to 10% was a huge thing for first-time buyers and for new property,” says Pat Davitt, CEO of IPAV. “€30,000 is the deposit on most houses. A lot of people have been saving during the Covid period but at the same time, it’s a big thing for people to be able to save that amount of money while they’re probably paying huge rent for a property at the same time.”
“We’d really like greater certainty surrounding all the supports that are available for First-time Buyers of new homes,” says Conor O’Connell, Director of the Southern Region of the CIF. “The Help-to-buy scheme has proven its worth and proven its ability to help supply over the last number of years. What we are seeing now with the introduction of the Shared Equity Scheme, we’d like to see certainty around the Help-to-buy scheme as well.”
Apart from the renewal of the Help-to-buy scheme, the Government are planning to introduce a “Shared Equity Scheme” by the end of the year. This has been modelled on a British scheme, where results have been positive — increasing supply and not causing undue house price inflation. Under the proposed scheme to be made available to first-time buyers of new homes, the Government would take a stake of around 20% of the property.
The buyer takes out a mortgage on 80% of the price of the house and the Government’s stake is free equity for the first five years of the mortgage term, with a low rate of interest thereafter.
“We need to recognise that the Government requires novel approaches so that they can work with individuals and families to assist them to buy their own homes,” says Paul Hannon, Director of Sherry Fitzgerald New Homes in Cork.
“The proposed Shared Equity Scheme is one of these approaches… It will be particularly useful for first-time buyer families as it will enable them to buy a home with mortgage repayments below monthly rents.”