Recent reviews of the national housing market by Daft and MyHome confirm the trends that we see here in Gallagher Auctioneers. Rents for dwellings are rising faster (10% pa) than prices (6%).
Demand is very strong in Carrick-on-Shannon where prices enjoy a premium over other areas. However, prices (other than for exceptional sites) have not recovered to the point where the construction industry considers it worthwhile to build in the new.
The average price for a three bedroom semi-d in Carrick on Shannon is €140,000 while the average rent for this house is now approximately €550 per month. The re-payments on a mortgage of €120,000 are now approximately €600/month making it worthwhile for a tenant to become an owner of an existing home.
However, the cost of building this three bed semi-d at the moment is approximately €170,000. The repayments on a mortgage of €150,000 are approximately €750 per month.
Latent demand is there and continues to grow. However, it does not manifest itself, as young people live at home and commute while saving that deposit.
The Central Bank rules effectively tether house price to household income. (Mortgage < 3.5 times income and Loan to Value <90%) Builders cannot build desirable homes at a price that the market can afford. Therefore, builders cannot build schemes of houses or apartments and the market cannot benefit from economies of scale.
It is more than interesting though how the market behaves –
Ideally, it would be a well-oiled machine where individuals or couples could acquire what they need when they need it and simply move as their needs change. (Their investment would appreciate with the market). But transaction costs encourage people to buy for the long term.
They would like a 4 bed detached with spacious gardens front and rear regardless of whether they need it or can afford it. A 2 bedroom apartment might be closer to their needs and their income.
When mortgage approval is on-hand, there are a number of options –
Self-build on a family site. This provides for individual tastes in design, guarantees good neighbours and probable baby-sitters. It also condemns the new parents to the cost of running two cars and spending most of their free time in those cars.
If it becomes necessary to sell at a later date, the property is unlikely to sell as well as a similar specified house in the town.
This option also militates against the stable development of good towns with social, medical and commercial services.
Buy in the town from a builder. Builders have not got the financial backing to build except to order given the relationship between market prices and building costs. Builders costs are the same everywhere.
However, in the town the builder carries the overheads of public lighting, roads, footpaths, mains connections and the site acquisition/development costs together with the cost of Social Housing provision. This requirement of Part V of the Planning Act is significant both in terms of actual cost but also of market perception/price.
Buy an existing house. In this case, the services work, the gardens are mature, the neighbours are known and the site is included in the price.
The house may be extended, insulated or otherwise improved as required.
There are grants and skilled tradesmen available locally for most jobs. The house will cost you less than a new build, will be in a much better location vis-à-vis services and should result in less driving and better opportunities for all the family.
The outlook for the housing market around Carrick-on-Shannon is very positive. Increasing employment, reducing vacancy rates in the surrounding rural areas and rising rents all point to continually rising prices
If you’re thinking of selling this year, contact Gallagher Auctioneers at (071) 9621000 or at gallagherproperties.com.