A decade is not a long time in the context of the property market. Historically, this equated to one cycle of increasing demand and decreasing supply, right through to peak pricing (some overheating?), into met demand and oversupply. These peaks and troughs are inevitable symptoms of our commercial-driven approach to property development and property investing, which makes housing delivery dysfunctional as, socially, it ought to be need-driven rather than commercial-driven. It is an unpalatable reality that, over the past six decades, housing delivery has become almost incompatible with the market. This is why government policy cannot keep pace; the lag in policy-making means that States are invariably solving yesterday’s problems. And that simply does not work.
Ten years ago, the property crash gave bold, cash-ready investors a unique opportunity to buy properties at prices well below market value and to later refinance those assets with historically low interest rates. The crash didn’t create market winners, it enabled those with the right mindset and the money to win. That’s an important distinction. Could the same be true for the market in 2020?
There is nothing cyclical about the current pandemic. The marketplace right now is not just unpredictable, but completely dependent on a natural, live virus, the efficacy of scientific research and the actions of the State to support businesses and to successfully reopen the economy. We knew that it would be more difficult to open the country than it was to close it, we still don’t know how much more difficult this will be.
Residential transactions in the second-hand market have effectively stalled over the past month, with few new transactions being agreed. It is still too early to calculate the true unemployment rates in Ireland and to measure the impact of this on ‘qualified’ market demand or would-be homebuyers’ ability to secure finance.
It will be interesting to see how online auction houses fare this month and next. There are a number of multi-lot property auctions happening online in May and June. Significantly, ‘Prices are cut sharply for lots at online property auctions’ according to Donal Buckey, reporting for the Independent this week. He confirms that BidX1 has reduced the guide prices for many of properties listed in the next online auction. With many traditional estate agencies around the country embracing online bidding, there is a spread of opportunities and potential to secure properties at a good price. It does not feel accurate to refer to ‘market value’ or ‘below market value’ at this time, too much is still unknown and unknowable about what shape the recovery will take; however, experienced local buyers will be familiar with many of the lots available and will likely recognise the opportunity for a good buy. The real question is whether or not people will be bold enough to take a longer term view and put their cash into property despite the unknowns… Can they tell the obstacle from the opportunity?
Director / Business Development
Lotus Investment Group