The residential property market is always a hot topic in Ireland, and 2018 did not disappoint in providing many talking points in Galway and across the country.
It could best be described as a steady year with consistent interest in all levels of the market from upper end to entry level. Potential buyers are very price conscious, well informed and educated, and followed the market rather than driving it. This necessitated a well planned and considered approach from vendors when offering their home to the open market, they need to give time for purchasers to assess the property being offered, and then to let them react thereafter.
Sherry FitzGerald sold many properties in Galway over the course of the year in the upper end including sales at Cluain Mhuire, Taylor's Hill for €1,400,000; St Paul’s Road for €875,000; Mweeloon, Maree, for €1,240,000; Bothar na Greine, Barna, for €785,000; Kingston Road for €649,000; and Carragh Grove for €635,000. Likewise activity in established suburbs such as Knocknacarra, Renmore, Roscam, and Newcastle was healthy.
The starter home to mid-level market trended to see more competitive bidding as the properties were more affordable and appealed to a broader base.
In Galway the average price of a house in the city increased by 6.1 per cent to €288,000 year on year while in the county, average prices grew by 6.7 per cent to €200,000. Nationally prices showed more modest growth to four per cent, between January and September of this year prices grew by 3.8 per cent compared to 6.2 per cent in the same period in 2017. This latest data on price performance indicates a slowdown in the pace of price growth which reflects the steady trends experienced in the market.
There are a few notable factors that have affected the rate of price growth — a more limited mortgage market due to tighter lending policy introduced towards the end of 2017, and an improved offering and supply in the new homes market, have collectively resulted in the slowdown in the pace of inflation.
In the new homes market almost 4,300 units transacted in the first six months of the year, a 31 per cent increase year on year nationally with a 43 per cent increase for Dublin. Construction activity continues to ramp up with an increasing number of new homes being built and residential units receiving planning permission. Galway saw an increase of 33 per cent in construction optout compared to 2017 figures.
Aligned to the new homes market, the Help-To-Buy scheme has had immensely positive impact on the market. Not only has there been a marked increase in new homes transaction activity since the inception of the scheme, this had been coupled with a notable jump in building activity. To date, the growth in the new homes market has been broad based, but most noticeable in Dublin and neighbouring counties. Help-To-Buy has been near to its most prevalent in these counties, both in terms of absolute numbers of claims, but also the proportion of claims to actual new builds. Galway has finally seen more activity in the new homes market with Sherry FitzGerald selling a development of 30 houses at Ceathru an Tobair in Oranmore and launching scheme at Doire Fea of 50 homes in Moycullen and 14 luxury houses at Beal Taoide, Oranmore. In addition, planning has recently been granted to Burkeway Homes for 197 homes in Barna and Lioncor has received permission for 78 homes at Clybaun Road, Knocknacarra.
Comparing the Property Price Register data to mortgage drawdown data from the Banking and Payments Federation Ireland during the opening half of 2018, indicates that 41 per cent of single property transactions did not have a mortgage attached to the transaction, signifying that the properties were likely to have been bought with cash. The comparable figure in the opening half of 2017 was 43 per cent.
Owner occupier levels remained strong during the opening half of the year, accounting for 73 per cent of all purchases, virtually unchanged from the same period in 2017. Notably first-time buyers accounted for half of all owner occupiers.
Finally, an analysis of vendor and purchaser profiles in the opening nine months of 2018 reveals a continued outflow of investors from the buy to let market. Reflecting the trends of recent years 35 per cent of vendors were selling their investment properties while investors entering the market represented only 18 per cent of purchasers. This trend continues to deepen the supply side crisis in the lettings market, which is already incredibly challenging.
In conclusion, 2018 continued to be a positive and steady year in the residential property capital market in Galway and nationally. Tony Kavanagh, director of Sherry FitzGerald, commented: “It appears the market is adjusting to new lending rules, affordability, and is moving forward at a steady and controlled pace. This trend is likely to be similar in 2019 which is grounds for optimism as our core residential market matures to reflect our growing solid economy.”