NlNETEEN ninety six will be remembered as the year of spectacular price rises. According to the leading estate agents, the value of the average family home rose by around 20 per cent, a hike that made trading up virtually impossible for many buyers.
What this meant was that large swathes of Dublin - especially established suburbs like Terenure, Rathfarnham, Rathgar, Dartry and all along the DART line from Howth to Killiney - became out of reach for many of the people who grew up in them. If your ambition was to settle down in a modest home of your own close to where you grew up, then the chances are that you weren't able to afford to this year. That is, unless you had around £200,000 to spend.
Those who had a lot less, say around £100,000, found that even smaller, unrenovated houses were selling for more than they could afford. These buyers, particularly young couples hunting for a first home, were forced to look further afield, out to the new suburbs of West Dublin or North Wicklow, Swords, Balbriggan, Celbridge or Naas.
Demand for new homes was heavy in all these areas throughout 1996, with lengthy waiting lists and overnight queues for some schemes. In any of these new developments, £100,000 bought a spacious four-bedroom semi-detached house with no little or no stamp duty to pay and a Government grant for first-time buyers thrown in. No wonder then that the younger buyers flocked to the outlying suburbs, leaving the areas that they grew up in to wealthier, double income buyers.
1996 will be remembered as the year of the big spenders, when close to a dozen Dublin houses sold for £1 million or more, a level never before achieved in the property market. Independent Newspapers executive Mr Gavin O'Reilly paid £1.95 million for Bartra, a Victorian mansion overlooking the sea at Dalkey, the highest price ever paid at auction for a Dublin home. A couple of years ago, it was rare enough for a house to make over £500,000. This year, more than 30 Dublin houses sold in excess of £500,000, with 17 making over £850,000.
A string of very strong auction results early in the year set the pace for a frenetic selling season. With interest rates at their lowest in 20 years, buyers were prepared to pay record prices and, in many cases, the results were well beyond estate agents valuations. In May, the Irish Times Property Supplement calculated that 15 of the top-selling houses had actually made up to 50 per cent more than the pre-auction estimates. These included a three-bedroom railway cottage in Ballsbridge that sold for £187,000 (estimate £125,000) and a four-bedroom bungalow on Ailesbury Road that made £505,000 (estimate £350,000).
By the end of the summer, those prices were beginning to look like good value. There were no less than five bidders for a run-down Edwardian house on Shrewsbury Road, Pitcairn, which was bought for £1.55 million by the businessman Mr Des McEvaddy. A month later, his brother, Ulick, paid over £1.4 million for Auburn House, a Georgian mansion in Malahide.
Estate agents admitted that, in many cases, they simply had no idea how much a house would eventually make. Investors were particularly active in the residential market making it more difficult for couples to buy both new houses and second-hand homes. Because of the strong demand for rental accommodation in Dublin, many new players were prepared to pay over the odds to secure residential investments.
While there was stiff competition in the auction rooms, private treaty sales were also highly competitive for most properties. In many cases, estate agents held private auctions or sold by private tender, achieving prices which were well above original asking prices.
PRICES rose most dramatically in the fashionable suburbs of Dublin 4, Killiney and Dalkey but there was a knock-on effect in solid, middle-class areas like Terenure, Rathgar, Ranelagh and Clontarf where record prices were achieved for family homes.
There was an acute shortage of new homes because of the lack of sites zoned for development in the suburbs. The pent-up demand was most obvious in mature areas like Carpenterstown where, last month, over 100 houses valued at over £8 million sold in four hours in the Riverwood scheme.
With limited opportunities to buy houses close to the city, first-time buyers are now having to settle for development further away, like Lucan and other parts of west Dublin.
Demand should ease next year when several majors schemes come on stream, at Cherrywood, in Loughlinstown, at Milltown and Terenure and on several sites in west and north Dublin.
Both first-time buyers and investors also dominated the apartment market in the inner city where all the schemes sold out within days.
The strongest demand was in Temples Bar despite the fact that prices are substantially higher than in other parts of the city. Attention next year is likely to be focused on the docklands area, where up to 1,500, acres are available for development.
While 1996 was marked by buoyant house sales, it will also be remembered as the year when private investors dominated Dublin's commercial investment market for the first time.
Almost £230 million of private funds were invested in this sector, mainly by consortiums of business and, professional people. The normally-powerful insurance companies and pension funds only managed to buy about £60 million worth of property investments in a market which produced overall returns of almost 20 per cent for the year.
The intervention of the private players was not unexpected because they, more than anyone else, are well aware that the fortunes of the commercial property sector are inextricably linked to the wider economy. With business confidence at its strongest for years, many of the new investors are now banking on higher rents and values and a continuation of the low interest rates to capitalise on their newly-acquired properties.