High demand for rental properties affecting house supply

Property sales may not be a hot topic at the moment but the ever-expanding rental market in Ireland is generating some interesting new trends.

“Because people can’t get finance they are resorting to long-term rental. So all those properties not sold are being channelled on to the rental market until it picks up again,” reports Westport auctioneer, Teresa Walsh.

However, because of this new demand for rental properties, those most commonly on the wanted list are creating new shortfalls.

“My experience in Westport is that good quality three and four-bed properties are in very short supply. Because it’s more difficult to get finance people have no alternative but to rent. However, the type of properties prospective tenants are seeking are difficult-to-find top end properties, with the best of furnishings and fittings and a good garden for the family.”

Olivia Needham of DNG Needham auctioneers has experienced a similar trend.

“We’re definitely under serious pressure with some clients who can’t get a house. There is a reasonable supply of apartments but a lot of them are unfinished so the supply is choked up. The flow is gone in the rental market too as in the past people would rent for six to 12 months but they’re not moving out anymore. If they’re happy with their house the tendency now is to stay and renew the lease.”

The pattern of people upgrading to bigger and better houses after a few years has also died away and this in turn has meant one-off houses within 10 minutes of Westport have managed to hold their own in terms of selling price.

“People who bought properties in the last five or six years are no longer selling unless they absolutely have to because the priority now is just to keep the loans paid. A consequence of this is that one-off houses within 10 minutes of Westport have held their own in sales price terms, not falling much below the asking price in the boom. Apartments by contrast have been slashed sometimes by as much as 50 per cent.”

English buyers are also enjoying the good value to be had from the drop in the value of the euro.

“One client who agreed to a sale less than a month ago held out before closing the deal at the better exchange rate so the sterling rate is definitely in favour of the English buyer right now.”

Small builders are no longer buying sites for one-off builds anymore either as it is just too risky. “So it’s beginning to dry up and we’re having to do with whatever existing stock was there.”

Despite these new rental trends, the Irish tradition of home ownership hasn’t gone away, according to Teresa Walsh of Walsh Auctioneers. “Property ownership is in Irish people’s blood and at the end of the day they still want to own their own home. It’s the national dream. Even clients in their forties and fifties who are renting still aspire to owning their own home.”

 

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