Predictions of crashes give buyers jitters, writes Edel Morgan
These are confusing times for anyone planning to buy or sell property in Ireland. While some estate agents are reporting the first signs of a soft landing, others claim there is still a bullish appetite for residential property in this country and the current slow-down is largely related to seasonal factors.
Meanwhile the most vulnerable sector of the market, first-time buyers, are being left in a quandary as to whether to buy now or take a "wait and see" approach and risk prices rising again after the summer.
Last week I received an e-mail from a guy who said he had heeded warnings about the property market for some time and "now finally" has put a deposit on a house. He is getting cold feet because of "a lot of negativity" from people around him, which is making him "seriously doubt whether I should buy at this particular time.
" I'm also afraid to lose the house and not go for it because I know it will be snapped up as soon as I do. The house, as with most houses today, is for crazy money but... location, location, location. It's perfect! I am, and have been, aware of the downturn in the US which could in turn create a domino effect in Europe but buyers have been living in constant fear of a pending crash for at least 10 years as far as I can see and it hasn't happened... yet!
"What do you think?" he wrote, "I could do with a little positivity (is it really that bad?). I would appreciate your advice or any help you can offer."
Reading between the lines I could tell he wanted someone, anyone, to tell him he was doing the right thing. Unfortunately, in the absence of any psychic powers - that I'm aware of - I couldn't assure him that there are no risks involved.
There is a theory, however, that given its population, Dublin and, in particular what are regarded as "well located" areas in Dublin, will be less affected by a downturn in the market.
The reader seems to regard the house as ideal for him, which is just as well, as anyone taking the risk of buying a property in an uncertain market should be prepared to live in it long term. While most Irish economists are predicting a soft landing, if a negative equity situation occurs, he will have to hold on to the property until the market emerges from the crisis.
It's also crucial to consider affordability should interest rates rise significantly. I told him that certain economists and most estate agents (surprise, surprise) are predicting continued growth for the rest of this year at least, albeit at a slower pace, on the back of continuing demand and SSIA windfalls.
His dilemma is common. I know of a family who have been renting for years and which has been put off buying in the past by doom-laden predictions. They recently saw a reasonably priced property advertised in their preferred area in north county Dublin but are now hesitant following this week's bombshell.
While some agents insist that confidence in the market is still riding high, Alan Cooke of the IAVI has said it appears that a soft landing is imminent but won't happen across the market in one fell swoop or in all locations simultaneously.
It does seem that properties aimed at first-time buyers and middle-price brackets have experienced some sluggishness: neither group is affluent enough to take bets on a risky market prone to rising interest rates.
A house a few doors away from mine in Beaumont - where properties were being snapped up at an unrealistic €500,000-€600,000 until March/April: a phenomenal rise of €100,000-€150,000 on the previous summer - has being languishing on the market since early May and has now had its price reduced from €525,000 to €495,000.
A friend who is selling his three-bed semi in Whitehall, Dublin 9, for a price that would have been considered the going rate until early this year, has been told by his estate agent that he should consider revising the price downwards.
According to some reports the new homes market has taken a hit as some first-time buyers wait to see if prices fall and if developers offer better deals to offload properties. The last time this happened was post 9/11 in 2001 where appliances and furniture packages were being included as sweeteners.
The upper end of the market seems to be less sensitive to interest rate rises. However, last week Property reported the details of two expensive properties being sold by Lisney with reduced asking prices, which may reflect the time of year: a five-bed house in Dalkey with a 90ft back garden went from €1.85 to € 1.7 million and a five-bed house in Foxrock Manor from €2 million to €1.9 million. In the same week a house at number 8 Gilford Park in Sandymount, Dublin 4, sold for nearly a €1 million over its guide price of €1.5 million. I also know of a lady who sold her period house on the North Circular Road, Dublin 7, at auction for well in excess of the guide price in early May and recently won a bidding war for a 1930s redbrick property she bought for over €900,000.
But if trader-uppers continue to have difficulty selling their properties, it might be only a matter of time before this sector of the market is also affected.
