Blog 01

Property price inflation has reached an astounding 15 percent for the first time in seven years. The housing market is brimming with steam. Will we see rates bite buyers as we've seen in the past, or is there more to come?

Eoin Burke-Kennedy economics correspondent for the Irish Times believes that the property cycle has three stages. “—boom, slump, recovery” and predicts Ireland will soon fall into a slump. He refers to so-called “clear signs” in the record-high interest rates and increases in the cost of living in response to Covid-19. Said signs can prove to put off buyers.

Burke-Kennedy spoke on a podcast about just what this cycle means for soon-to-be homeowners, and how interest rate spikes will affect mortgage owners. Specifically referring to those 300,000 owners of tracker mortgages. Which have benefited from one percent for the length of a decade. With supply improving, are conditions improving for those looking to purchase a home for themselves.

Apartments Set For A Downward Spiral 

Stillgoran village located in south Dublin will see some serious development in the future. With the construction of hundreds of new apartments, Cairn homes are a large contributor to that number. Cairn is set to construct nearly 400 apartments on the old Blakes restaurant site, just across the way Kennedy Wilson intends to hit around 200 apartments at the Cornerstone.

These projects are one of many to arrive, providing plenty of value to residents. They offer convenient locations, high-quality residences, residential lounges, and fitness centers.

In fact, not a single one of these residences will ever reach the open market. A majority are catered to the upper end of the retail market, with rent exceeding 2000 euros for a two-bedroom unit.

In these times when a developer pitches a new site for sale, they seek out a singular buyer.

That isn't something that only pertains to Stillorgan. During a time of an often addressed housing crisis, only one type of buyer remains. The institutional investor.

Recently a chief executive of Housebuilder in Glenvaugh, Stephen Garvey stated: “The demand for apartments is only from one customer – that’s institutions. There’s no private demand out there, there’s no State demand out there.”

Local housing authorities did end up purchasing a fair amount of new project apartments for social housing, the government has altered its opinion on policy.

Demand in the state is near empty, is there no demand from buyers at all? Differently put, is there actually no demand for the rates selected by developers?

Recently the reputation of apartments with household buyers has taken a hit, undoubtedly. Word of extremely steep bills for apartment owners to correct fire safety and construction issues of boom time apartments. This has caused apartment shoppers to be wary and uncertain in their search for a home or apartment.

Furthermore, the existence of mortgage regulations that the central bank has established, makes this option a poor choice for someone who may not be there for long.

Amongst the new buyers, there is some worry. Why risk their first-time buyer status on buying a new apartment in these conditions?

The concern revolves around the fact that a new first-time buyer only needs a ten percent deposit on their home, whilst someone trading up is required to put a twenty percent deposit down.

Putting down twenty percent of the cost of a home can be very daunting, for those trading up, near impossible. In the situation that their apartment doesn’t increase in value at the same time as houses, it can make this even more difficult, as the equity in their home isn't on par with house growth.

This could easily turn those away who are in the market for a “starter” home. A house they can comfortably move on from in a few years' time.

In fact, with the sudden jump in housing prices, and the costly rent. There is room to say that if starter-home apartments would hit the market, there would be considerable interest.

Contrarily, on the second-hand market, Dublin agent Jane Carroll stated she had “no issues selling apartments whatsoever”.

Carroll still receives interest from investors. Often from those with pensions looking to purchase, or those looking to get an Irish visa through investing in Irish property.