In the first six months of 2020 house prices generally have remained remarkably stable, according to the latest Residential Property Price Barometer from IPAV, the Institute of Professional Auctioneers and Valuers.
In Westmeath there has been a rise of 5.17 percent for three bedroom semi-detached homes, an increase of 1.49 percent for four bedroom semi-detached homes, with no change in premiums for two bedroom apartments.
Uniquely the survey charts average prices actually achieved by auctioneers in the first six months of 2020 compared with the last six months of 2019 for these three best-selling property types.
Pat Davitt Chief Executive of IPAV said this was a time defined by the COVID-19 pandemic with the shutdown of the economy taking place midway through the period and Auctioneers in lockdown for 13 weeks.
“Despite early predictions by some economists and lenders of a slump in prices arising from the fallout from the virus this has not happened,” Mr Davitt remarked.
IPAV maintained from the start of the pandemic that property prices would remain firm and pent-up demand would keep prices largely stable and he noted that in rural Ireland there are properties still selling for less than the price of construction.
“This study has underpinned that view of the market. There has already been a correction in the Dublin market by about 20pc and there are approximately 300,000 too few properties, so it would appear at this juncture there is only one way for prices to go,” Mr Davitt continued.
Mr Davitt said internationally Ireland is looking like a safe place in Europe with many buyers eyeing the country as a location for a second home.
“This trend contrasts with the outflow of funds over the years to foreign properties. Many native Irish are now re-discovering Ireland and realising the value and beauty on our door step. With a lack of enthusiasm for flying and a movement to working from home people are looking afresh at Ireland and like what they see in terms of a new lifestyle,” Mr Davitt added.
He said this new wave of purchasers has certainly impacted the price of country properties and anything with a water view has become much sought after.
Across the 41 separate market areas the IPAV study covers, there has been movement upwards and downwards, although not major.
Stamp Duty Shake Up
Meanwhile, the IPAV has called for a radical shake-up of what it calls ‘exorbitant’ Stamp duty rates that are stymieing many good rural renewal incentives to encourage people to move back into rural areas and to also adapt former commercial premises into homes.
In a pre-Budget submission to Government today (Monday ) IPAV calls for the stamp duty rate of 7.5 percent on small commercial properties and land of up to a value of €500k to be reduced to 1pc in line with the residential Stamp Duty rate.
It calls for a sliding scale for properties over that value for properties/land valued between €500,000 and €1m a 3pc would apply, rising to 5pc for those between €1m, and the full 7.5pc applying over €2m.
Pat Davitt Chief Executive of IPAV says this is critical now that more people are working from home and demand increases across rural areas, arising from the COVID-19 pandemic.
“We estimate there could be up to 100,000 properties lying idle, including former commercial premises, that could make very attractive homes. While there are good incentives for renovation young people first need to buy the properties.
“The current Stamp Duty rate adds €7,500 to every €100k expended,” he said.
The IPAV submission also calls for the Help-To-Buy (HTB ) scheme to be extended to include second-hand homes. The scheme currently applies to first-time buyers of newly-built homes to buy a new house or apartment. It also applies to once-off self-build homes. It provides a refund of income tax and Deposit Interest Retention Tax (DIRT ) paid in over the previous four tax years.
“There is a good supply of properties for prices much lower than that of new homes, typically at prices of between €170k and €250k, especially in rural areas. Such an initiative would have the positive consequence of freeing up properties in the cities for rent or for sale,” Mr Davitt added.
He said new homes, even in rural Ireland, priced between €250,000 and €300,000 are already too expensive for young people on an average wage of €40/50k.
“There are many areas throughout the country where second-hand properties are being sold for less than what it would cost to construct them. And it would cost young people less to service a mortgage, with its huge long-term benefits in terms of personal wealth, than paying rent,” the Chief Executive concluded.