FIONA REDDANon the hunt for a family home
ITS FINALLY here, but how will the arrival of the much-talked about price register, which gives historical sale prices back to 2010, actually impact on buyer behaviour?
Already, it has affected us. We had been bidding on a house prior to the launch of the register and the price had exceeded the asking price with three or four interested parties.
While it was a combination of factors that swayed our hand, the revelation last Monday that the house next door to our desired property had sold for €40,000 less – and appeared to be in better condition – some 10 months ago played its part in pushing us out of the running.
After all, would buying at the higher price have instantly plunged us into negative equity? Or has the market really jumped that much over the past year? It’s a difficult call to make, and one we may yet regret because the house had a lot to offer, but I don’t think we’re the only would-be house purchasers thinking like this.
Indeed one agent at a viewing over the weekend recalled how he had taken several angry calls from potential buyers that week arguing about an asking price for a property he had put on the market. The callers were wondering why it was on at a price that was significantly higher than properties that had recently sold on the street. His argument was that it was a completely different property to those that had previously sold, which is a valid defence, but you can see the register acting as a ceiling on a particular street. People are unlikely to be prepared to pay over and above what their neighbour has. At least not in this market.
Now when a new house appears for sale, the first thing I – and many others do I’m sure – is check historical sale prices in the area. But sometimes a little bit of information can be dangerous. Perusing the register I have spied some properties that appear to have been sold at bargain prices, but even if you can find the old brochure for the property online, it’s still difficult to gauge from it the amount of work needed on the property.
And of course the vendor has to agree to sell at that price – so just because someone negotiated a deal €100,000 less, doesn’t mean you will be able to also. In that regard, you could spend the next year making low-ball offers based on one or two sale prices from the register and end up nowhere.
It would also be nice to see some sort of index derived from the – admittedly very raw – data published by the Property Services Regulatory Authority (PSRA) giving a feel for price per square foot. It’s how the market works in countries like France, and offers a level of comfort for buyers.
It means that you can almost immediately figure out in which areas you can afford to buy, as it gives a guide for the cost of a property depending on its size, which can then be bumped up or down depending on factors such as the garden, state of the property etc.
But where the register undoubtedly offers clarity is with regards to asking prices. For anyone looking to buy, the opaqueness of the Irish system has meant that you typically turned up to viewings and tried to wheedle information out of the estate agent. Now those days are well and truly gone, and estate agents will have to be prepared to deal with well-informed buyers, who will likely walk away from a purchase rather than pay what they perceive to be over the odds.
Since the register appeared, I have done my own little survey of houses we would have considered and there is a common trend. A five-bed for example, (small and in need of TLC similar to the house next door) that was on the market for €350,000 in Stillorgan but the agent was looking for more. It sold for €380,000, or close to 10 per cent above the asking price.
Or how about a four-bed in the Holywell estate in Goatstown? It sold for €485,000 during the summer, or €10,000 below the asking price. Or a three-bed semi-detached needing an update between Stillorgan and Blackrock, which was originally on at €460,000, before a subsequent price drop to €395,000 saw it sell for €381,500 a year later.
I could go on, but it seems that a very low asking price will possibly see bidders push the sale price above, while in demand areas can command prices close to the asking price. And elsewhere, you can probably aim for a sale at between 5-10 per cent below the asking price.
Even more interesting is examining asking prices post-publication of the register. In July for example, a three-bed house in Springvale, Rathfarnham was sold for €270,000. Earlier this week a similar house was put on the market at €275,000. Such close tracking of asking prices with sale prices is to be welcomed, and might give the confidence to some of those property buyers currently sitting on the fence to take the plunge.
But given the constraints people face when it comes to getting financing, the price register is unlikely to lead to an escalation in prices.
Which is good news for us – but only if we can find a house. The search continues.
