according to Irish Property Watch €310 million euro was the total amount that prices on the popular property website Daft were reduced by in from last March until this February. This looks at properties listed in the 26 counties and then the total amounts that the asking prices were decreased by and then adds them all up, in percentages the average was -7.6%
However there are a few things to bear in mind, firstly, The market is probably getting used to the idea of more realistic asking prices, the market has without doubt slowed down in the last 12 months and there probably is tendency of people who are listing their property for the first time since the slowdown began to price optimistically and then after an initial period to price more realistically or ‘price to sell’.
To the Bears this may be a sign that prices are falling at a spectacular rate, and that might be true, it could also mean that prices are simply coming in line with actual as opposed to speculative values which is what we have become accustomed to over the last decade, as well as that we are also in the winter period which is traditionally a slow time of year.
There was an uncertain stamp duty outlook towards the end of last year that meant some houses may not have moved as prospective buyers waited for the outcome, the owners of these properties may now be in a position where they are being forced to lower their price in order to shift the property and that could account for a portion (it is not however an explanation) of the figures posted in the report.
Developers in several areas have also slashed prices to get people to buy, with the effect that one development actually had people camping out overnight in order to purchase! We have not seen that in a few years!
Initially I figured it was a D15 thing, because that is an area of high development, yet underdeveloped overall infrastructure in terms of roads and council services being on equitable par with the size of the population. The rapid growth in west Dublin has not experienced an equally rapid growth improved infrastructure, indeed, I never cease to wonder why there wasn’t a LUAS line to Blanchardstown.
There is also the question of supply and demand, and currently supply outstrips demand so this (in certain areas, again, such as Dublin 15) will end in price cuts, the Price cuts initially happened in the areas you would expect, areas with a high level of stock and a level of demand that would not match it. Then there was a €100k cut in Leopardstown, an area that one would think would always have strong sales potential and would never need to cut prices, the result however was that people queued up to buy.
The question is (for me at least), are prices just getting more realistic? Or is this a fire sale as property heads for further lows? Is the price cutting something that developers have done to shift stock before prices fall below that of what they acheived when they brought out sale prices? Selling everything at 100k less today is better than selling nothing next year or at 150k less because the market could move that way. Developers primary aim is to sell properties, not sit on them, and although some of the bigger players could afford this there are obviously others who can’t or won’t.
One thing we don’t need is continued front pages of newspapers with ‘the sky is falling’ articles, I don’t think it is representative of a factual way to deal with things, any more than the ‘things will always go up’ articles we saw when the market was in an upswing. The real equations are about supply and demand, and thus far it has shown that there is a demand at the right price, so maybe we will all have to fall in line with a new demand curve, whatever that might be, presently there is too much flux to call it accurately.
Currently there are more sellers than buyers and that will mean that prices will probably have to adjust further in order to attract buyers, the fact that new builds (which is what we have focused on for the majority of this article) are only one spoke in the property wheel, there are also more second hand properties coming on the market and the two do compete with eachother.
If an area is desireable my theory is that it probably already has a house on it, and therefore all new houses that are being built (primarily, not emphatically) are in areas that are not as desireable (i.e. commuter belts), and that puts a further strain on prices. Despite the prices reductions more properties are still coming on to the market so there may be an upswing in the number of transactions but not necessarily in prices, these are indeed interesting times for the property market.
Then of course there is the mortgage interest rate outlook, and we don’t know for sure whethere or not we’ll (the European Central Bank) be following the course set by the man to the left!