For anyone looking to relocate to Dublin, buy their first property, or trade up or down, the prospects for buying a home in 2019 look better than they did in 2018, but construction levels are still far off meeting estimated demand of 30,000- 35,000 new homes a year.
The positive news is that more houses are being built. New homes completions for 2017 came in at 14,500 – a rise of 46 per cent on 2016 – while the Central Statistics Office has reported a year-on-year increase of 30 per cent in new homes completions to 7,909 for the first half of 2018. The majority of new homes are in Dublin and the mid-east, which accounted for more than 60 per cent of all new housing completions. Dublin 15 (Castleknock, Tyrrelstown and Blanchardstown) had the highest number (308) of new houses built.
Taoiseach Leo Varadkar was quoted recently as saying the Government is in a “good position” to meet its housing delivery targets. “We have a housing crisis in Ireland, the solution is to build new homes and more homes and that is happening. It is going to take time, but we are getting there,” he said.
But getting “there”, where supply meets demand, is a long way off, as output at about 18,000 units is 50 per cent behind.
A recent Goodbody BER housebuilding tracker expects the housing supply deficit to continue until 2020, especially as the level of apartment building is relatively low, with new apartment building up only 7 per cent in 2018 . "We can expect new-home completions rising to 23,000-24,000 units in 2019," says Marian Finnegan, chief economist and director of research with the Sherry FitzGerald Group.
So it’s mixed news for anyone thinking of relocating to Ireland to take up a new job. On the upside, there will be a better choice of homes from starter level up to executive level and prices are softening, but there is a way to go yet before there are enough homes to meet demand for those looking to buy at entry level.
David Browne, head of new homes at Savills, says: “There will be an increase in the stock of new homes coming on the market in 2019 but there will be a lack of supply of apartments. New homes prices are softening and stabilising. Not enough entry level apartments and houses are being built – this is where the real pressure point is.
"The new homes market is getting competitive. People are demanding quality and product differentiation is much more important for developers. This is best illustrated at the Clairville Lodge development in Malahide, where we've sold 20-plus high-quality homes since 2017."
Ramp up output
Glenveagh is one house builder planning to ramp up output in the coming years. Its chief executive Justin Bickle says: “We’re significantly increasing our supply. Our targets are to deliver 250 completed new homes in 2018, to deliver 750 in 2019 and to deliver 1,000 in 2020.
“Glenveagh is developing new homes in locations where the supply/demand imbalance is most severe. We are focusing on the greater Dublin area, Cork, Limerick and Galway. Our portfolio is weighted towards starter homes, with about 70 per cent of what we’re building priced at €350,000 or less.”
DNG’s Paul Murgatroyd has suggested that first-time buyer demand for new homes has been “undoubtedly underpinned” by the Government’s help-to-buy scheme but, as this is due to end in December 2019, he expects a “surge” of applications for the scheme in 2019.
When demand is far stronger than supply, prices should be going up sharply. Not so, however, as the Central Bank's 3½ times salary mortgage-lending rules have cooled price growth to low single figures and introduced clear ceilings to affordability. "A couple earning the average wage of €40,000 each can expect to borrow just €280,000, which pretty much rules out most properties in Dublin," according to a recent Irish Times report
Affordability is a key issue in the market, even if typical mortgage repayments are about 40 per cent cheaper than renting. Getting a deposit together is also harder: the Banking & Payments Federation Ireland reported that the median deposit for first-time buyers rose by almost 11 per cent in the second quarter of 2018 to €37,500 but, in Dublin, it stands at €54,389 and at €125,000 for second or subsequent buyers.
Second-hand market
In terms of the second-hand market, Angela Keegan of MyHome.iesays the stock of second-hand homes has turned the corner – up 6 per cent nationally and by 16 per cent in Dublin.
But Marian Finnegan suggests there has been only a “slight increase” in the number of available second-hand properties and supply remains “critically low”. There were about 25,800 second-hand units for sale countrywide in July 2018, an uplift of 3 per cent year-on-year. “Dublin experienced the greatest improvement, with supply rising 31 per cent compared to July 2017,” says Finnegan.
“The commuter counties of Kildare, Wicklow and Meath also recorded increases in supply, increasing by 15 per cent, 10 per cent and 4 per cent respectively. Outside of the greater Dublin area, each of the regional centres of Cork, Limerick and Galway experienced some increase in supply within the city limits, but overall supply remains limited.”
In terms of second-hand values, Browne says the market is much more stable, with prices softening as supply has increased. David Bewley of Lisney suggests it has become "acutely apparent" just how price-sensitive the market is, with demand in many cases slightly below asking prices. "The upper end of the market, north of €1.5 million, wasn't immune from general market conditions," he told The Irish Times recently.
Rena O'Kelly of Knight Frank suggested recently that pent-up demand at the upper end of the market has now been "largely satisfied" and, as a result, properties are taking more time to transact. "This has impacted on prices," she told The Irish Times, "with the Knight Frank prime index showing that prices fell by 1.7 per cent in the 12 months to September, the first annual decrease since 2013."
Looking ahead, Finnegan says house price inflation is likely to remain in the “low single digits, not exceeding 5 per cent” for 2019.
Houses coming up in 2019
Gannon Homes is set to launch the final phase of Millers Glen in Swords, Co Dublin, where starter homes are on the market from about €325,000.
Twenty-four high-end homes at Westminster Wood in Foxrock, Dublin 18, are launching in the spring through DNG. These will include four-bedroom houses, two- and three-bed apartments and duplexes and one-bed plus study apartments.
Three-bed houses at Vernon Mews on Vernon Avenue in Clontarf, Dublin 3, are due to hit the market in the spring through Savills, with prices from €760,000 to €1.05 million.
Hooke & MacDonald is set to launch 35 houses at Bollarney Woods in Wicklow town early next year, with prices from €335,000 for three-beds and €420,000 for four-beds.
Knight Frank is soon to launch large four-bedroom family houses at Limekiln Manor on Limekiln Road in Walkinstown, Dublin 12, at prices from the late €600,000s.
A spring 2019 launch is set for The Nurseries on Taney Road in Dundrum, Dublin 14, where a boutique development of 31 three- and four-bed terraced, detached and semi-detached family homes is likely to start at more than €600,000 through Sherry FitzGerald New homes.
Three- and four-bedroom houses at Citywest Village in Citywest, Dublin 24, are set for a spring launch, with prices from €320,000 through Sherry FitzGerald New Homes.
A February launch is set for one- and two-bed apartments at William Beckett House on Pembroke Row in Dublin 2, where Savills is suggesting prices from €415,000 to €845,000.
The same agent is releasing a further phase of large high-end family homes with prices from €900,000 to €1.2 million at Clairville Lodge in Malahide, Co Dublin.