It is often said that commenting on the property market is an inexact science. This has been especially true in the last decade in Ireland with all the commentators in the boom times saying that double digit growth in the value of property was going to go on for a long time as the economy was solid and the banks were strong and solvent. George Lee was always pessimistic, for up to 10 years in fact, preaching caution and finding fault with the economic policies of the various governments and booming property prices but eventually he was right, as much as a stopped clock will be right twice a day. He was bound to be right some day and history has proved him to be so in this instance.
Then according to the various pundits we were going to have a soft landing which went on until the international banking crises exposed Ireland’s major fault lines and sent property values into a steep spiral of decline, knocking up to 50 per cent off the values of residential property values nationally to date, from its peak in mid-2006.
One thing that is true in the property market is that it is cyclical, and a shrewd observer of this market will look for signs of decline and of growth. There are always indicators of this and the secret is to recognise them and to act on them.
A typical sign of confidence starting to wane has always been a falloff in interest in the Dublin auction market. This has always been a tangible indicator that confidence is starting to die in the property market. This started to happen in 2007 with houses not selling at auction and being withdrawn and then lingering on the market, losing value until prices were drastically reduced and eventually selling.
An indicator that confidence is starting to return to the market is rising residential rental values indicating a demand mainly by young first time buyers who are poised, renting and waiting for prices to drop to affordable levels, ie the bottom of the market.
This appears to be the case at the present, with a report out by Daft.ie recently indicating that residential rental values have started to rise since the beginning of 2010. This would seem to indicate that the supply of rental property is starting to dry up thus pushing rents up. This will naturally follow on into the for sale market where the supply of good quality houses is starting to dwindle in good locations where demand is starting to rise again. This would seem to indicate that confidence is starting to return to the market.
When asked to comment on the situation, Dermot O’Meara of Sherry FitzGerald O’Meara, a veteran in the estate agency business, stated that property sales activity picked up in the last quarter of 2009 and continues so far in 2010. Good quality houses are selling, provided the price is right.
Overpriced houses are lingering on the market forever with little or no interest resulting in no viewings or offers.
Purchasers are active and buying, provided they can get the mortgages, and there seems to be money for pragmatically priced houses.
Spring-time is traditionally the best time of year to put houses on the market for sale as they get the best exposure at this time of year with the days “getting longer” and outdoors looking better after the long winter months.
In essence the cycle is turning as it always does and currently property seems to be at the bottom of the cycle. Activity is increasing and prices are expected to run flat for the foreseeable future until the national economic situation improves.
For anyone interested in purchasing in the near future the market seems to represent good value at present with a good range of supply which is predicted to dwindle as the year goes on.
To be a shrewd observer/purchaser, watch out for the indicators of growth and buy at the bottom of the market for best value for money.