Relaunched - at bargain prices

Developers trying to shift stocks of new homes are re-launching, cutting prices – and some are even giving free furniture

NEW HOMES for sale this autumn are set to be made up almost exclusively of previously launched schemes being re-released with reduced prices – and sometimes with incentives such as free furniture – as builders make a big effort to shift stock.

Not since the 1970s has the number of new housing completions – just 8,383 in the first seven months of this year – been so low, nor has the State ever had such an overhang of properties, with 300,000 homes across the country empty and in various states of completion.

With such an overhang it is not surprising there are almost no first-time launches. The closest builders will come to new launches says Ronan O’Driscoll, residential director of Savills, are schemes where building has continued and new phases are on view.

One such development – “it’s the nearest thing we are going to see to a brand new launch” – is a new phase of Clare Village beside Clare Hall shopping centre on the Malahide Road, says O’Driscoll. A new block of apartments with previously unseen showhomes is to be launched later this month. With units now at €170,000 for a two-bedroom apartment with a full furniture fit-out thrown in, the price has fallen by 66 per cent since the scheme was launched in 2006.

At Kilcoole in north Wicklow Sherry FitzGerald is selling a new phase of Holywell, which has been developed over the last number of years. The new phase consists of three-bedroom semis at €265,000. The scheme was first launched back in 2007 and prices have fallen substantially since then. At the original launch, three-bed houses were priced at around €500,000, and by February 2009 slightly smaller three-beds were quoted at €355,000.

Elsewhere, Adamstown in Dublin is still attracting buyers, largely because Castlethorn is prepared to take a reduction on three-bedroom houses which are now selling for €199,000. More new phases are planned. Belarmine is still offering new apartments and houses in Stepaside with the October opening of the nearby Luas, a big selling point.

In Dún Laoghaire, Cosgrave Developments is continuing work at the former Dún Laoghaire Golf Club lands on one of the largest residential developments likely to be built in south Dublin over the next decade. Almost 1,500 homes are planned for the 78-acre site.

It is expected 30 houses and 140 apartments will go on the market there by the end of this year or early next. Market demand will dictate the speed at which the remaining homes are developed.

Property website Myhome.ie list around 78 new homes developments in Dublin this week. Some of these, while previously unoccupied, are probably better described as “nearly new”, having been on the market for some time. Others, including a development of four-bed semis at Grosvenor Lane in Rathmines for €850,000, are described as “sold off plans” and have yet to be built.

O’Driscoll says some builders have discovered returns of about seven per cent are available on the rental market and at that level, he expects foreign, particularly German, interest in buying up blocks of apartments in the Dublin area.

While some property developers are prepared to go on building in what they feel are the right locations for cheaper prices, they are selective about the areas. Perhaps unsurprisingly, places where building has continued include parts of Fingal, Kildare, Galway city, Meath, Wicklow and South Dublin. These are the areas where, according to a recent study from the National Institute for Regional and Spatial Analysis in NUI Maynooth, “relatively sensible planning” was carried out during the boom years.

The NUI Maynooth study paints a dismal picture of current new-home building across the country and gives a preview of the audit of “ghost estates” commissioned by the Minister for Environment John Gormley.

The study found there were about 300,000 homes vacant across the state. There are about 620 ghost estates of which around 120,000 homes are never likely to be sold. Many of the unoccupied new homes are in counties Roscommon, Cavan, Longford, Leitrim, Monaghan and Sligo. Figures from the Central Statistics Office showed that Roscommon, for example, had no less than 35 ghost estates.

Some of these ghost estates may however represent good value for those willing to relocate, with new homes being offered in Cootehall, Co Roscommon, from about €225 per month.

Planning applications in these areas are now almost exclusively for one-off homes on family lands. The Construction Industry Federation said development-led housing schemes “have practically ceased” across the country with the only activity in these counties being homes built on family land.

It points out that the number of new starts in the first six months of the year was 2,357 – of which 1,987 were individual units.

The Department of the Environment estimates housing construction will be as low as 14,000 to 15,000 units this year, but the CIF puts the number at 10,000. A department spokesman acknowledged that the statistics for planning permissions were somewhat out of date, but they do indicate a massive drop off in activity right across the country. In the first three months of this year, the number of planning permissions granted fell by more than 60 per cent, compared to the similar period last year.

The figures show that planning permission was granted for 5,510 new homes compared with 14,177 in the first three months of 2009.

In the first quarter of the year planning permission was granted to build 3,585 houses, a 65 per cent slump on the 10,256 granted in the first quarter of 2009.

The department also says that permission was given to build 1,925 apartments in the three-month period compared with 3,921 in the same time in 2009, which is a fall of 50.9 per cent. One-off houses accounted for 28 per cent of all new units given planning permission.

Clearly, in some areas the overhang in the housing market is large enough to satisfy planning demand for many years to come.

But it is not the size of the overhang which is the problem according to Ivan Gaine managing director of Sherry FitzGerald New Homes. He said the question of an overhang depends on “what it is, and where it is”. Gaine says the demand for traditional semi-detached homes in good areas is strongest and he doesn’t believe there are enough of these being built, particularly in the key south Dublin market. He estimated there were about 3,500 units available in south Dublin, but just 10 per cent of these were traditional houses.

“There are just 350 to 400 traditional houses being built and we are seeing stabilisation of prices in these homes with some exceeding the asking price,” Gaine said, adding, “I do see a time in south Dublin when we will have too few houses.”