As the selling season draws to a close some vendors are prepared to dropprices to achieve a quick sale, writes Edel Morgan.
The key to a prompt sale in the current residential market is a realistic price tag. Pitch your expectations too high and you are likely to be left with a property you cannot sell. Some vendors are coming back down to Earth with a bump by having to reduce the asking price of a property to even drum up interest.
Property industry analysts have put this realism in the market down to the strong increase in housing stock - 65,000 new homes will be completed this year - and the fact that prices may be approaching the limits of what buyers are willing to pay.
"Purchasers are clued in and know the value of a house and what should be paid for it," says Martin Doyle of HOK Residential. "Reducing the price creates renewed interest and often it happens that interested parties will bid up to the original price."
Sensibly priced houses are generally taking four to eight weeks to sell in the current market, with second-hand houses close to urban centres and good transport links more desirable than newer ones.
House prices for new houses increased by 0.9 per cent in October 2003, while second-hand prices rose by just 1.3 per cent.
"Apartments and houses in new estates are taking longer to sell due to their sheer volume. Also, in an estate, if there is one house on the market it might sell quickly but if there are three at same time it may take longer and you may see price reductions," says Doyle.
Often a price will be slashed to below a stamp-duty threshold, which can represent a small reduction - for example a house on Fairways Avenue in Finglas Dublin 11 on sale through Sherry FitzGerald has been reduced from €325,000 to €317,000 - or a substantial reduction - a three-bed townhouse 7 Wentworth, in Eblana Villas, Dublin 2, has been reduced from €350,000 to €317,000 through HOK Residential.
A high percentage of reductions appear to be in the mid-price range. For example, a house at 30 Ardagh Park in Blackrock, Co Dublin, has been reduced to €500,000 from its previous asking price of €530,000. A house on Church Road on Dalkey, Co Dublin, has been reduced from €605,000 to €585,000.
Stephen Manek of Douglas Newman Good says the current slowdown is "not necessarily a drop in the market but a drop in competitive interest".
He reports that sales of properties in the €800,000-plus category of the market are relatively healthy but the apartment market is suffering with prices dropping , "although not dramatically. The softening of the rental market and the consequent scarcity of investors has affected apartment sales. Supply is strong and is keeping prices levelled and the number of investors offloading existing properties has added to supply and has affected prices."
Apartments in well-located and efficiently run developments are still selling well, but situations where you have three to four people bidding on an apartment are less frequent than this time last year. Some potential buyers are stalling in anticipation of what the market will bring next year . Predictions are that house-price growth is expected to slow to 6 per cent next year, after increasing by 12 per cent in 2003.
But the divide between prices in Dublin and elsewhere is widening with homes in the capital 37 per cent more expensive. The average home increased 11 per cent in value to €267,600 since January and is expected to rise another point by the close of 2003. But equilibrium is the byword for 2004. Interest rates are not likely to rise until next spring and there is expected to be a deceleration in house price inflation over the next 12 to 18 months.
"Next year it will be a much better and healthier market," says Stephen Manek. " It's no longer the case that buyers don't have a clue what they're going to need to borrow to get a house. Now people know what they should be paying for a house and what you will need to borrow and vendors know they can't get away with asking stupid prices."
