Good things predicted for market in 2014 but it is not without its challenges

Good things predicted for market in 2014 but it is not without its challenges

Further growth is expected in the market this year, particularly in Dublin

It’s a New Year but what exactly does it have in store for the property market?

Both economists and estate agents would appear to be suggesting that growth is on the horizon.

We’re just over a fortnight into 2014 but already there has been a number of positive indicators that the market is set to turn a corner in the months ahead.

Perhaps it already has. After all, Sherry FitzGerald were the first to kickstart the year with a report that found that property prices nationwide rose by 9.2% last year.

While Dublin’s 14.1% growth in 2013 undoubtedly led that revival, even excluding the capital the rest of the country still saw prices grow by 3.2%.

If there is growth outside of the capital this year then it is likely to be small once again but NAMA, for example, clearly feel things are improving based on their decision to wind up the 80:20 Deferred Payment Initiative from next May.

Clearly, there are many areas of the country still in decline but key urban areas are starting to follow Dublin’s lead in showing genuine growth for the first time in years.

Of course, stock is the big factor. At present, it’s at an all time low in Dublin with the number of properties for sale in the capital falling by 30% in the last year. The lack of availability of good, reasonably priced family homes has undoubtedly driven prices up and this shortage will lead to price surges of as much as 15%, according to new figures in the report of the Expert Group on Repossessions.

This problem is not as pronounced elsewhere but there are problems emerging in the likes of Cork City, where sales in the county areas are now outperforming it.

What could be a huge determining factor in how the market performs this year will be the banks. Will they loosen the purse strings tightly and offer more credit to both businesses and people seeking mortgages and will they start to sell some of the thousands of properties they are sitting on following repossessions? The answers to those questions are unknown but depending on their outcome it could have a huge say on what happens in the year ahead.

There are plenty of reasons to be optimistic though. Small, albeit steady, growth can now be seen in the construction sector while Dublin has just been tipped as the best place to buy property in Europe this year in a new poll of European real estate experts. Consumer sentiment is also at a six year high.

Last year commercial deals approached €1.9 billion, a four-fold increase on 2012, and that is likely to continue into 2014.

According to Robert Ganly, managing director of estate agents Ganly Walters: “As yet the recovery is most recognizable in Dublin and it will spread out to other areas over time.”

While Mr Ganly admits that there are many developments around the country that should never be built, most industry experts admit that there is a need for more building in areas that require it.

Whisper it quietly but the market would appear to have turned a corner. This sort of steady growth is good for the overall economy but until issues such as stock levels, negative equity and availability of credit are dealt with, we will struggle to get to a point where the market is deemed healthy and normal – and, no, that doesn’t mean a return to the Celtic Tiger days but simply to a place where the property market assists the economy and people can buy, rent or move to suit their needs at any given time.

What are your predictions for this year? Have your say below…

There are 11 comments for this article
  1. tom at 3:20 am

    Hi ,
    house prices rising is not good news never is in any part of the world. All it does is make it very difficult for young to buy houses they end up in the renting market . As most people live in their house it not an investment its their home . I would like houses prices to stay low as I want my sons and daughters to be able to buy a house and have a life . Not to be up to their necks in dept both having to work all hours just to keep a roof over their head . Houses prices rises is good for estate agents and banks as both make more money .Ireland does not need another property bubble . Let face it !The banks did not suffer or lose nor did the estate agents .They are not left with houses worth less the value that they were bought for some cases 50 % of the price house . Like my young sisters and brothers and friends over nite lost hundreds of thousands euros on the houses they bought in the last property bubble. What about all the people who lost their houses over the last few years . Not to mention the many thousands that are way behind on their mortgages and are fighting to keep the banks from taking their homes , that were way over priced when they bought them . Like all things house is only worth what people are willing to pay for it . Dont be fooled by the estate agents again .

  2. Niall Leinon at 9:07 pm

    After all these desperate years I am still being screwed by the legacy of B Ahern and his gangster cronies, whilst they laugh at the plight of their victims. Nauseating. Ship of fools indeed.

  3. Richard Rodgers at 5:31 pm

    Let’s not get carried away by your article. If house prices rise in the fashion you stated (9% last year) we face the prospect of a bubble. And we know the chances of a bubble bursting & it’s consequences. Medium to low house prices are the target & should be constrained by proper government (unlikely) measures. The financial institutions still need to be watched & controlled very carefully.

  4. Ernie Ball at 2:45 pm

    jamesrogers, what you’re saying makes no sense. Property prices rises are “good” because “when someone buys a home” the government collects tax and the people buying tend to spend.

    With regard to tax: stamp duty is hardly the big earner for the government that it used to be. Given the percentages involved, the government should have little interest in the prices paid for houses, at least if stamp duty receipts are the only consideration. Of course, the government has other interests like: keeping the banks from having to realise all of the mortgage losses on their books, which they would have to do if there were sustained drops in the property market and which would require more taxpayer recapitalisation. But that just goes to show how government has now become the servant of the banks rather than the people: it’s OK if people have to overpay for housing because it helps the banks.

    As for this business about people buying houses spending dosh on home improvements: yes, of course they do. And the more they spend on the house, the less they have to spend on everything else. So, really, you’re making my argument for me: lower house prices mean more money in the real economy (as opposed to the financialised economy of banks, estate agents,, that got us into this mess).

    If you want the country to do well, lower property prices have to be part of that. Another property bubble serves no one and sucks vital capital out of the real economy. You cannot have an economy built on people selling each other houses. We tried that and look where it got us.

  5. Paddy at 1:40 pm

    Lower home prices mean a less indebted population with more money for the good things in life. High property costs also mean a less competitive economy. On the upside everyone who earns a living through fees linked to property sale prices gains when property is expensive, which explains why the property industry loves to see increasing home costs, even though it’s bad for everyone else.

  6. Theresa at 1:10 pm

    I guess I am one of the loosers. I have had my home on the market for almost a year now but while we are getting steady viewings people feel we are too rural. When we bought the house 7 years ago it was a case of there is nothing else in the area so we bought this. We live in a stunning area of the southeast but IMHO the biggest problem is that there is little or no employment creating in this region to encourage people to move out of Dublin.
    We have dropped our price three times now and we are at a stage where this is the limit to allow us to move on. Its very fustrating but I still feel we our government needs to look at the regions and start encouraging job creation outside the capital or there will be very little growth in the house prices outside
    the capital. 🙁

  7. Jack Feeney at 12:34 pm

    There has NEVER been a Soft Landing OR Economic Adjustment or Property Crash according to Irish Economists and Dodgy Estate Agents so why should either sources be trusted now to provide an honest evaluation of the market?

    They never got it right; except when it was booming and even then, they were, as they are now, talking it up, regardless of what was happening in the market. Clear agenda. Newspapers are still doing the same.

    I do not believe there is an honest, impartial source of information on the Irish Property market within Ireland and websites; Myhome and Daft are no exception.

  8. Joe at 12:25 pm

    There was a property clown on Pat Kenny earlier gushing about 400 to 500 sales last year from outside Ireland for properties outside Dublin.
    Beyond the drooling hype this translates as about 1 property sold every two to three weeks in each of these counties! Definitely green shoots and surprisingly PK fell for it.

  9. Pat at 11:50 am

    Has the government created the current property price hike?

    It recently introduced three measures that immediately spiked house prices – thereby squeezing out already hard pressed families and individuals. These are (1) tax relief for investors and (2) lower stamp duty and (3) property tax relief.

    Firstly, tax free sales on gains in property were introduced in December 2012. This exemption from CGT applied to properties bought after the Budget date and before 31 December 2013. I see that it’s now extended to December 2014. It applies for seven years during which time it is reasonable to expect an increase in the value of the house being sold on.

    Secondly, this government reduced stamp duty from 6% to 2%, also from last year.

    Finally, first-time buyers purchasing a second-hand home were exempt from property tax for a period- but a mistake now means the credit applies to all people who bought a second-hand house.

    If renters want to point their finger at the culprit, they should look not at their parents’ generation but towards the policies of successive governments which have rewarded the rich at the expense of the average worker.

    I’m a lay, PAYE, person and this is my understanding of the current market forces. I would welcome honest and impartial debate.

  10. Ernie Ball at 11:40 am

    The property market is a zero-sum game. This means that for every gain in property prices, somebody wins (the property owner) and somebody loses (renters, potential first-time buyers). For every drop in property prices, equally somebody gains (renters, potential first-time buyers) and somebody loses (property owners).

    Given these incontrovertible facts, can explain why they portray rises in property prices as “good news”? I can explain it. sees itself as representing the interests of (in descending order):

    2. Estate agents
    3. Property owners

    For all three of these groups, increases in prices are “good news.” For anyone hoping to spend less of their income on property, for anyone renting and feeling shut out of the market and FOR THE ECONOMY AS A WHOLE, decreases in property prices would be the real “good news” story. Think how much more spending there would be if people could devote less of their after-tax income on property! They could spend it on the real economy rather than inflating another bubble. We’re still paying for the last one, by the way.

    In short: do you people never learn?

    • jamesrogers at 12:20 pm

      Ernie, I get where you are coming from but the general view is that the more transactions (whether they be at a high or low level) the more tax take for the government and they are in need of funds. Furthermore when someone buys a home they tend to quite often spend additionally in the local economy on everything from paint and wallpaper to pots and pans and beds and furniture. This in turn creates jobs, again which are needed. While the spending of the Celtic Tiger era was crazy, a lot of tax was brought in from it and while we don’t want a return to that, an increase in the tax take from property could also prevent the likes of water charges and property tax spiralling further upwards in the next few years.

      Of course, there are winners and losers but the reason there are so few properties for sale at present is because a large portion of the population are stuck in negative equity and can’t afford to sell up. This has prevented the previous “natural transition” which may have allowed people to buy a small home or apartment before upgrading to a bigger place as their family situation allows it. I know myself of several people currently raising children in one bed flats. They survive, of course, but it’s not ideal and they have no way out of this situation in the current climate. Ultimately the market will always have cycles where some win and some lose but it’s fair to say there have been far more losers in the last few years. An upturn in fortune would do more good than bad in my opinion and no that doesn’t mean a return to the crazy days.

Leave a Reply