Central Statistics Office statistics from last week show that Irish property prices have risen by the slowest rate in six years. According to the report, property prices have risen a mere 2% since last summer. Unsurprisingly, the increase in supply is having an effect to steady (slow?) the market and inflation has also slowed down. We know that buyers are more aware of the market and certainly, they are more educated in terms of property buying and reading the signals of the marketplace. This has led to more considered property purchases, which is not a bad thing. As Brexit looms over us, no one is certain as to how this will impact the Irish property market. It has caused some big questions and buyers are paying attention to how the market reacts. The slowdown in the market can also be part-attributed to the restrictive mortgage lending rules as set out by the Central Bank.
Dublin is still the place where most first-time buyers are struggling to buy, although Wicklow, Meath and Kildare are now listed as the most unaffordable counties for first time buyers. Arguably, the economy is performing better and the improvement in people’s earnings is making a greater number of new homes more affordable. That being said, property ownership remains out of reach for some ‘would be’ homeowners. As an industry, how do we tackle the thorny issue of delivering affordable, private housing? Logically, we need to offer value to new homeowners in order to keep the market stable. The balance of supply/demand has always been the critical factor in housing, and it will continue to be so. Hopefully, the Government will extend the help-to-buy scheme or replace it with a similar supply-side initiative, something they have not confirmed as yet.
The supply/demand mismatch is not just an issue for property sales, it is strangling the rental market right across urban centres in Ireland. The Irish Times recently reported that only a fraction of landlords who have rented out properties on Airbnb and other ‘home-sharing’ websites have registered them under the Government’s new short-term letting rules. The figures were obtained from local authorities within designated rent pressure zones including Dublin, Cork, Galway and Limerick. The regulations came into effect on July 1st, yet many people have failed to register their properties. To date, Dublin City Council received only 110 registrations, which is a problem considering there are 6,228 rentals currently listed in the Dublin area on Airbnb. Registration with Galway City and Limerick City Councils are equally poor, with Galway receiving only 8 registrations and Limerick City receiving just 2. Cork City Council reported only 2 registered with them, which seems bizarre.
As the regulations are already in place – and enforceable – it is worrying that many property owners have not registered yet. Not for the first time, we must point out that ignorance of the law is not an excuse so landlords of short-term lets are encouraged to read up on the rules through their local city and county councils. Inevitably, the recent unsuccessful Friends First planning application for change of use will not encourage landlords to play ball. The rental property market will benefit from freeing up of these properties but we need to explore the changing business model around short-term lets in Ireland. As always, we would love to hear your opinions and experiences around the new guidelines…
Director / Business Development
Lotus Investment Group