Michael Grehan Head of residential, Sherry FitzGerald
What we learned in 2013
It was a game-changing year for the property market. The combination of very low available supply, particularly in the regional centres, and pent-up demand resulted in a much more competitive bidding environment, with resultant price inflation in Dublin, Cork and Galway in particular.
The biggest lesson learned is that while, understandably, we have been transfixed by events of the past five years, it is essential that we understand the dynamics and ongoing requirements of a young population, which has grown by 8.5 per cent since the start of the bust. The lack of construction over the past five years now has the potential to put unreasonable pressure on the current housing stock.
What to expect in 2014
I think 2014 will be similar in many ways to 2013. There will be opportunities to increase housing output to satisfy the significant undersupply of the right property type to buy and rent. Expecting the unexpected has become a recent feature of Ireland Inc. Being more curious and contrarian is a helpful way to be more prepared for the pleasant and unpleasant surprises that may lie ahead.
Biggest areas of concern
The lack of suitable accommodation to both rent and buy and the resultant pressure on prices, and potentially salaries, in the major cities. The supply shortage has the potential to unravel a lot of the competitive advantage which was a consequence of the downturn but which was positioning Ireland well for recovery.
Biggest opportunities
We can increase employment in our key cities and the surrounding counties by encouraging the building of suitable accommodation for a young dynamic and growing population in what is now an incredibly competitive economic environment. If we achieve this, we will position Ireland well for a significant recovery.
Simon Stokes Chairman, residential professionals, Society of Chartered Surveyors Ireland
What we learned in 2013
There is greater pent-up demand in Dublin than anyone realised. Demand is also outstripping supply in well-established residential areas in Cork and Galway. A significant number of cash purchasers are looking for good quality family homes. There's increased interest in investment properties, particularly smaller commercial investments under €1.5million. Developers are looking for residential sites in Dublin as property values make development a realistic option again. International investors and "vulture funds" are snapping up some of the best property in the country.
What to expect in 2014
Continued growth in Dublin residential prices and gradual improvement in other major urban centres. Little improvement if any elsewhere, although we hope that the recovery will radiate outwards from Dublin and other large cities. Continued strong demand for good quality agricultural lands.
Biggest areas of concern
The lack of supply of family homes in many areas. Negative reporting of price stabilisation and recovery. Lack of political will to get banks to lend despite the billions poured in to rescue them. There will be no general economic recovery without bank lending. The SME sector is crippled by lack of funding. Government appears not to be focused on property market even though it presents huge opportunities for employment growth. Government needs to stem the flow of cut-priced property going to overseas funds. The State has absorbed the bank losses on these assets but we are now exporting the profit opportunities at the bottom of the value cycle.
Biggest opportunities
Property values are past the lowest point in Dublin but there are great opportunities to buy real estate in the capital and throughout the country. The focus of many international investors on Ireland is clear evidence of this. It would be a shame, though, to see Irish investors missing out because of a lack of bank funding.
Lorcan Sirr Lecturer, housing studies, DIT
What we learned in 2013
We learned that demography is destiny; a rising property market is evidence that where people want to live is where demand will be, which is not necessarily where developers build houses. We should take note for the future.
What to expect in 2014
More pressure on the private rented sector as local authorities stop doing what they have been doing for decades – building houses to accommodate those in need. We will also see a recalculation of the housing waiting list which will reduce it, but not enough to let local authorities off their housing obligations.
Biggest areas of concern
The lack of a coherent housing policy that addresses how many we build, where we build, what to do with those in arrears, buy- to-let mortgages, target levels of home- ownership, etc. Another concern is the lack of a housing profession in Ireland; something other countries consider normal, we relegate to that of administration.
Biggest opportunities
Now is a perfect time to tackle a range of housing and housing-related issues in a holistic and coherent fashion, based on statistics and evidence. There is a fantastic opportunity to develop a policy that will be integrated with other government departments and to demonstrate that occasionally joined-up thinking can be more than an aspiration.
Keith Lowe Chief executive, DNG
What we learned in 2013
Property prices have almost certainly fallen too far, particularly in Dublin. This was demonstrated by a quick rebound in prices, with five consecutive quarterly price rises in the capital as they moved towards fair value. This was inevitable as property prices had fallen too far, a view that was echoed by commentators.
What to expect in 2014
Property prices in the capital are likely to rise by 10-15 per cent next year. Quality family homes and apartments in Dublin city and suburbs will remain in short supply. We are also likely to see some price recovery, be it limited, in Cork city, Galway city and other high population, high employment areas. We also anticipate more tenants will choose to buy next year instead of renting.
Biggest areas of concern
That the Government will not follow the lead set by the UK by introducing measures to support the beleaguered house- building industry. Measures such as grants or tax credits for buyers of new homes, supporting financial institutions in the provision of construction finance, reducing development contributions (and passing on the new 2014 reduced rates retrospectively to existing permissions), exempting social and affordable housing conditions from marginal schemes and reviewing zoning and density guidelines are all measures that should be considered.
Biggest opportunities
The biggest opportunities are probably in the buy-to-let sector as yields are very attractive for investment properties such as apartments, townhouses and pre-63 properties (ie, houses converted into flats). Many entry-level properties are offering 10-15 per cent returns in Dublin and solid areas of Cork and Galway. The extension of the CGT-exemption tax for buyers who purchase by the end of 2014 and hold their investment properties for seven years is also a big opportunity.
Aidan O’Hogan Chairman, Property Industry Ireland
What we learned in 2013
In Dublin, just as the market overshoots on the way up, it does the same on the way down. With growth by the year end probably approaching 20 per cent in Dublin, there are clear signals here for the likely pattern in the rest of country in 2014 .
What to expect in 2014
Once buyers' confidence returns in other locations the very low-value base today, as compared to both previous values and building replacement costs, affords the opportunity for double-digit rates of growth soon. Published statistics suggest that those markets are either at or very close to the bottom and the level of perceived oversupply in many locations may be far greater than the reality when it comes to houses. Apartments may take longer to work through.
It’s likely that only about 3,000 new homes will be developed in the greater Dublin area during 2014 – although the market could probably absorb twice to three times that level.
Biggest areas of concern
We should learn lessons from the inaction in pursuing suitable new permissions for family homes in the greater Dublin area. Those lessons should be applied now to the other main cities and larger towns, so that we do not find similar recurrences there in 12 to 18 months time.
The planning function should be focussed on being proactive in facilitating a sustainable level of new homes rather than being in a pure passive policing role. When limited planning and erection of new offices for large FDI operators (and little new likely to be available until mid-2015) are combined with a rapid increase in house prices, there is additional risk that Dublin’s and Ireland’s attractiveness as an FDI destination becomes tarnished.
Biggest opportunities
With low interest rates prevailing, it's still a great time for investors to buy during 2014, with the exceptional benefit of the seven-year CGT tax relief, in what's likely to be a rising market across the country.
Graham Murray Head of residential, Savills
What we learned in 2013
Short supply in the Dublin housing market and the lack of new development, particularly in the three- and four-bed semi category, has seen competitive bidding become the norm in prime Dublin locations. There was a significant increase in cash-only buyers, which accounted for 57 per cent of sales in the first half of the year. However, an encouraging development is that the main Irish banks have started to lend again.
What to expect in 2014
Further price inflation due to shortage of supply and although there will be more new home developments in the Dublin area, planning delays are likely to restrict supply in the short term. Also, expect a resurgence of buy-to-let properties following the introduction of a number of schemes to incentivise investment. Dublin has led the recovery in residential property but we expect to see larger cities catching up. This will be helped by the entry of new mortgage lenders into the market.
Biggest areas of concern
Lack of supply. The construction of new homes is being restricted due to barriers set down by development authorities and restricted development finance. This could lead to spiralling inflation in prices and rents. Another key concern is the possibility of a decrease in cash availability.
Biggest opportunities
There should be significant opportunities in the country homes market in 2014 with Kildare, Meath and Wicklow being good locations for purchase. Apartments in prime locations such as Dublin 2, Dublin 4 and Cork city are also expected to be highly sought after. One of the biggest opportunities for the market will be attracting international investment interest in Ireland – particularly from the UK. The removal of the UK capital gains tax (CGT) exemption will be an incentive for non-resident investors – including Irish who have bought UK residential investments – to sell up and repatriate their money before the changes are introduced in April 2015.
Vincent Finnegan Vincent Finnegan Auctioneers
What we learned in 2013
Apartments are selling again with an increase in sight for early 2014 as investors have returned. There is a shortage of supply for family properties in good areas in Dublin, although new building and release of distressed properties are on the horizon. Some banks are now back speculatively lending. Overseas investors are picking up some great purchases.
What to expect in 2014
A decline in auctions. There is no value in fire-selling into an improving market, the seller loses out. Cork, Limerick and Galway will bid farewell to distressed auctions and the rest of the country will follow in 2015.
Biggest areas of concern
Although mortgage interest rates are continuing at an all-time low, this will not last forever. There may also be risks that planners (to be more correct An Bord Pleanála) will come under pressure to revert to inadequate planning standards in order to maximise yields from investments and interested parties. The board should pay particular attention to the planners' references to the development plans pertaining to areas.
Biggest opportunities
A continued improvement for the commercial property sector in 2014. Recent budget increases in Dirt tax has translated into a real increased demand for commercial investment properties which now offer tangible future capital appreciation prospects.
