The year 2000 will be seen as that in which reality came back into the Dublin property market after six years of unprecedented growth in house prices. Estate agents seem to agree that 1998 was the peak of the property boom, and while 1999 was another strong year, 2000 has proved to be much patchier in terms of sales and prices. Although the year started out well, with some strong prices achieved at auction, the market ran into trouble in the autumn when up to 50 per cent of auction properties failed to sell under the hammer. Rising interest rates, vendors' excessive expectations and Government strictures on investors combined to slow down prices and leave many properties unsold.
However, despite poor auction sales in September and October, estate agents claim that, overall, second-hand house prices will have risen by 15 to 18 per cent by year end, and that further gains can be expected in 2001. Figures compiled by the Department of the Environment suggest that second-hand house prices rose by only 7.7 per cent in the first six months of 2000, traditionally the stronger half of the year in growth terms. Returns for the rest of the year are unavailable.
It is difficult to apply percentage price increases right across the second-hand house market. The reality is that while certain sectors of the market - in particular, period properties close to Dublin city centre - performed extremely well, other house types may actually have fallen in value this year.
Modern estate type semis in the suburbs are not selling as well as in previous years and prices for some of these have been reduced, in some cases by as much as 15 per cent. Large period houses in the outer suburbs, particularly those needing refurbishment, were also slow to sell this autumn. One Dublin agent described the autumn market as one where sellers were greedy, and buyers prepared to take their time. "Sellers had gotten used to a market where houses were selling with a 10 per cent premium on top," he said. "This didn't happen in the autumn and it has been a shock." Now many properties remain unsold as both buyers and sellers wait to see what the new year will bring. Hardest hit are people trading up or down who have already bought and are now trying to sell their homes and meet bridging finance. In the last six years, buying first and selling later was a safe activity and people who did so were often rewarded with an even higher price than expected as prices moved up on a month-to-month basis. Now the opposite is the case and in some situations estate agents are encouraging vendors to drop the price in order to attract a buyer. "The market has seen a correction," according to Wade Wise, managing director of HOK Residential. "There was a lull in October, but it was less to do with prices falling than with them being the wrong prices in the first place. A lot of vendors have been keen to see their property go to auction, but in future vendors will listen more carefully to their auctioneers." Mr Wise predicts another busy year in 2001 with second-hand house prices moving on by 9 to 10 per cent.
According to Douglas Newman Good economist Paul Murgatroyd, negative press about the overall economy contributed to slow sales this autumn. "There has been a lot of press about possible economic slow down and it has affected people. When they realise that property will be no cheaper in 12 months' time they will begin to move. "We are expecting a busy spring and price increases next year of 12 to 15 per cent. Interest rates have almost peaked, though there may be another half of a per cent over the next 12 months. The fundamentals are still there, net immigration, prosperity. That's why we can be quite optimistic about the next 12 months." "We're very confident about next year," says Lisney director Tom Day. "We already have a stock of very good property, some of which will be launched early in the new year. We will definitely see growth, but not at the spectacular level of previous years."
Gunne Residential's Robin Palmer advises sellers to get in early as the first part of the year is always better than the second. "Vendors should remember that by the middle of the year half the buyers out there have already bought."
Sherry FitzGerald director Simon Ensor predicts that the first-time buyer market in particular will see good growth. "There is still a shortage of supply, particularly closer to town, and a great demand. Supply can be solved on the outskirts of the city, but not near the centre, so we would see small artisan cottages and houses going from strength to strength."
