Property
Irish houses for sale rise in response to increasing prices
By Finfacts Team
Jul 1, 2014 - 7:54 AM

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More houses have come on the Irish market for sale in the past three months than in any previous quarter since 2008, according to the House Price Report released today by Ireland's biggest property website Daft.ie. Almost 15,000 properties came to market between April and June as the national average asking price rose 9% from the same period last year. The average asking price nationwide is now €187,000, compared to €171,000 a year ago and €380,000 at the peak.

House prices in Dublin have risen 21% in the past year, with the surrounding counties of Meath, Kildare, Wicklow and Louth also experiencing annual price increases of between 6% and 13%. In the other major cities, increases occurred in Galway and Cork of 5% and 2% respectively. In Limerick city, prices were down by 9%, whilst Waterford city experienced a decrease of 4%.

The Daft House Price Report, which also analyses the Property Price Register, highlights that there were 28% more transactions at the start of 2014 than a year previously. This also represents the 10th consecutive quarter of growth in the number of property sales.

Commenting on the report, economist with Daft.ie, Ronan Lyons said: "There has been much talk of the housing market being illiquid, with a lack of homes available to buy. The evidence from the period between April and June is that the tide may be turning. More than 6,000 Dublin homes were listed during the second quarter, the largest number since early 2008. As a result, the total stock sitting on the market rose in Dublin from less than 2,300 in March to more than 2,800 in June. Further increases in supply will be needed, though, to work through the backlog in pent-up demand from the years of the crash.

Report [pdf]

Ronan Lyons asks in the report: "Are luxury condos the solution to Ireland's urban housing shortage?"

He adds: "There are simply not enough dwellings relative to families in Ireland's urban areas. To those living in many rural areas, blighted by half-built ghost estates, this may seem an odd solution. However, what first-time buyers prize now is access to amenities, in particular the amenity of job creation, which goes hand in hand with population density. The discount for distance from urban life has grown significantly in Ireland since 2006.

So far, so simple - build more family homes. And yet there is a further twist. Earlier this year, Ireland's Housing Agency commissioned research to investigate how best to deal with Ireland's demographic trends, in particular rising numbers of families living in or near cities and large towns. Their headline finding probably came as something of a surprise to most - there are enough family homes in Ireland.

The problem, of course, is that families are not the ones living in a large chunk of family homes. Instead, many of Ireland's most desirable family homes are lived in by empty nesters. What the Irish market lacks compared to its counterparts in other developed countries is both carrot and stick. The stick, for want of a better word, is property tax. In most developed countries, annual property tax bills for living in a family home are large enough that when the family home becomes an empty nest, the couple decide to downsize and save.

It may be an unpopular thing to say but - if we want housing in Ireland to be affordable - the Local Property Tax is far too low, rather than far too high. This, of course, is very easy for a commentator to say, but next to impossible for a government to bring in, unless of course it offered a revenue-neutral switch away from VAT and income tax, towards property tax.

Assuming that this will not happen in the next five years, what can be done? Well, if the stick does not exist, a bigger carrot is needed. Currently, an empty nester in Dublin looks around and sees very little that they could see themselves moving into in their early sixties. Talk of assisted living communities is certainly worthwhile - but is really a step further on, for people in their 80s, not their 60s, which is when the market needs movement."

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