Where to from Here? Our Sales & Marketing Director, Ruchika Hassan, predicts the future of the Irish housing market. As featured in The Irish Independent.
1 Dublin needs 18,000 new homes per annum, a far higher number than most people think
Demand for new homes is exceptionally strong and this is driven by a combination of factors including pent-up demand from a protracted period of limited supply, an ever-growing population with demographically driven demand, improved affordability among purchasers, and escalating rental costs. People don't realise that Dublin was never really over-supplied with new homes during the Celtic Tiger years, unlike other parts of Ireland. We predict that, contrary to other estimates, in excess of 18,000 new homes are required in Dublin alone each year into the long term. Various forecasts point to Dublin being the fastest-growing city in Europe in the next 15 years and we need to significantly increase supply to meet demand. Owning a house in Dublin today is on average 30pc cheaper than renting the same house. Dublin is unique in a European context in this regard.
2 Increasing apartment densities, reducing apartment sizes and increasing building heights in a sensitive way will deliver a higher Brexit dividend
We predict legislation to make the delivery of apartments more economical (densities, minimum apartment sizes, reducing car park spaces per apartment, number of apartments per core, dual aspect review, etc), will be enacted within 12 months and this will have an immediate positive impact on Dublin's Brexit dividend - businesses considering relocating from London want comfort that their staff can be accommodated in city centre apartment schemes. A change in legislation will immediately facilitate the delivery of a significantly higher number of apartments in Dublin, the housebuilding sector will react, and this will lead to more Brexit relocation announcements. Dublin has historically made very poor use of its finite stock of residential land. We need to be smarter in the way we use the land in our city and increase permitted heights in the right locations.
3 Purchasers' expectations will continue to grow
Purchasers have never been more educated and informed, meaning that homebuilders have to step up to the mark. While they are both knowledgeable and price conscious, they also pay particular attention to areas like energy efficiency, air ventilation and insulation. The first-time buyer today now plans for the future and asks: "Can I raise an expanding family in this house?" They expect the house to be able to adapt to their needs, so features like future-proofed attic space (ie, one that can be converted into additional living space) will become the norm. They also expect lifestyle and community facilities in close proximity to their homes (schools, shops, crèche facilities, playgrounds, etc). Purchaser expectations will have to be matched by homebuilders becoming more flexible in their approach to construction, customer service, and, in particular, after-sales service.
4 Mortgage providers will reduce fixed rates
The mortgage market continues to show strong growth trends, albeit off a relatively low base, on both the value and volume of mortgage approvals and draw-downs. Standard variable rates continue to fall marginally but are still very high by European standards, and when compared to fixed rates, are not very attractive. We are now seeing competition really heating up on fixed rate offerings. With the majority of mortgage providers solely focused on promoting keener fixed rate offerings, we believe that we are going to see some really competitive fixed rate offerings over the coming year. Two of the largest mortgage providers in the market have reduced their fixed rates recently and we predict that others will follow suit. Mortgage interest rates in Ireland are still double the European average - downward movements in rates have a fundamental impact on affordability for purchasers. The average three-year fixed rate (excluding the benefit of cash-back offers) in the market is currently 3.34pc for mortgages with an LTV below 80pc. There should be scope to reduce these by an average of 30 basis points.
Director of marketing and sales, Cairn Homes
This article is an excerpt from a larger piece published in The Irish Independent.
Read the full article here