How watchful of the London market do we need to be?

We saw the early signs of stagnation in the residential property market in London over 18 months ago, initially at the upper end of the market and now across all price brackets. Earlier this morning it was confirmed that London house prices are in continuing decline, with May recording the sharpest monthly price drop since the recovery began. This coincides with recently-released RICS data that shows the number of new homes on the market there has been rising consistently since the start of 2018. It is worth noting that rents in London also fell last month for the first time  since 2010.

So, what does this mean for the Dublin market and are there any lessons we ought to be watching out for? We know that average rents in Ireland continue to rise, however, the rate of monthly increase has slowed over the past two months. Also, the delivery of new homes to the supply-starved Dublin market is increasing – although the increase is nowhere near the 35,000 to 50,000 units needed annually (depending upon which commentator you agree with in any given week). What might be of greater concern, in the context of  London trends, is that sales of second-hand homes at the upper-end of the market here (which in Dublin is anything in excess of €750,000/€800,000) have shown signs of slowing for more than six months, with many now discounted from their original listing or guide price.

This is a particularly worrying trend in light of current, private, residential developments under construction in the greater Dublin area. The overwhelming majority of these will have launch prices well in excess of – and in some cases, double –  the average Dublin house price of €368,356. Of course, the simple answer would be to develop and build more affordable homes, however, data shows us that high site costs and escalating build costs makes this nigh impossible from a viability perspective.

As mentioned here recently, Dublin is now the sixth most expensive construction market in the world and we need only look at recent high-profile industry examinerships and liquidations to understand the fragility of the entire supply-chain here.

In light of this, it was particularly frustrating earlier this week to hear one of our elected members of the Dail on national radio pushing  for housing delivery under Part V to be increased from 10% to 20%. This suggestion is laughably unworkable and would achieve nothing except closing down most live sites around the country. As ridiculous and unlikely as this proposal is, it certainly highlights the absolute disconnect of Government to the underlying nature of our current housing crisis and the solutions required. It smacks of the old adage ‘The person who says it cannot be done, should not interfere with the person doing it’. This is something we would be interested to hear from the industry about, contact us with your views or experiences…

Ian Lawlor
086 3625482

Director / Business Development
Lotus Investment Group