Area focus: Central Dublin

The city centre is never as busy as other areas of the capital when it comes to residential sales. However, it has experienced something of a resurgence of interest recently with the both number and value of transactions increasing considerably.

In Dublin 2, for example, sales – albeit off a low base – almost doubled in the first six months of this year when compared with the same period last year. Over the same six months, the amount spent on property also rose by a considerable 273 per cent.

There were similar sales increases in Dublin 8 (48 per cent) and Dublin 1 (19 per cent), with the spend also up 75 per cent in Dublin 1 in the first half of the year.

The spend was down 37per cent in Dublin 8 relative to the first six months of 2013, but this was largely due to the €60 million sale of the former Clancy Barracks, Clancy Quay last year. If this transaction were taken out of the equation, growth would have indicated.

Investors are leading the way in the city centre, according to Owen Reilly of Owen Reilly estate agents, who is expecting a busy end to 2014. : “My own view is that I think there will be a slight pick up in supply throughout the autumn with valuations going up a little more.

“In the city centre and Docklands area, a lot of people are coming out of negative equity and a lot will be looking to sell soon. Some people’s two- to three-year apartment plan turned into a seven- or eight-year apartment plan and a lot of those people are either living in apartments with children or have rented them out up until now.

“If they can afford to move they’ll certainly look into it and that will lead to an increase in supply, which could take the heat out of things a little. However, with the Capital Gains Incentive running out at the end of the year, I think there will be a huge incentive for investors to buy this autumn and winter.

“The Government is almost encouraging it given the Dirt rate at present. The yields are not as attractive as they were maybe a year ago but, with the housing situation being the way it is, I don’t see how supply is going to meet demand in the foreseeable future so it’s hard to see price increases not continuing,” said Reilly.

The auctioneer, who opened at the start of 2008, recently advertised for a number of new positions within his company, a move he puts down to the improvement in the market.

"Aside from what is going on in the domestic economy, you're seeing Google and Facebook continuing to expand. Facebook are trebling their workforce while a lot of Googlers are here five or six years and want to put roots down and buy somewhere. The supply and demand mismatch in the Docklands is incredible and that has led to rent inflation. As a result, you can't blame people for looking elsewhere, especially as it's quite often cheaper to pay a mortgage with interest rates than to pay rent," he said.

DNG chief executive Keith Lowe was in agreement that investors would play a big part in the market in the remaining few months of 2014.

“I see the expiration of the Capital Gains Tax as being a big driver in the next few months. In the city at present you’re already seeing all the starter units being bought by investors.

“Central Dublin is very strong with a lot of interest in apartments and townhouses. In truth, first time buyers are struggling to compete with investors.

“A one-bed in the Docklands area was €150,000 seven months ago but now they’re selling for over €200,000.

“Outside of that in areas such as Ranelagh, Clontarf and Portobello, there is just so little stock available. There are more properties coming on sale, though, as people come out of negative equity.

"Overall confidence has also improved and all the banks are lending. AIB, Bank of Ireland, and KBC are the most active at present.

“A lot of people in the city centre are still living in rented accommodation. Some of them would have sold in the peak but even though they have savings they are now finding it difficult to get back on the ladder.

“We have a number of new developments coming on-stream soon like Sion Hill Road, which is a new development of 69 three- and four-bed houses in Drumcondra. There are others but the numbers are very low and there is still not enough homes being built in Ireland, especially in the city centres.

“Between January and May there were only 800 new homes registered with Homebond for the whole of Ireland, which shows you how bad that situation is. Confidence has improved, but there are still challenges. Social housing is a major issue, with rents and capital values still rising due to a lack of stock.

“Things have got better all round but it’s not an even recovery. We expect there to be around 32,000 houses changing hands across Ireland this year, but in a country of two million people that’s not normal and represents only about 1.5 per cent of the stock. In the UK that’s at about 4.5 per cent and even in Northern Ireland it’s at about 3.5 per cent but we won’t get up to that level until the banks start lending more and into the investor market too,” said Lowe.