Property Partners, the nationwide property group, has called for the Government to introduce incentives for the provision of new homes in areas with the lowest values.
The first quarter of 2017 has already seen property prices increase nationally by in excess of 4%. It is widely accepted that the only way that this can be controlled is by increasing supply. Pent-up demand is evident in the most popular areas. Property Partners believes however, that the gap in property values between the urban areas and the regions will only continue to widen. According to CSO figures just released only 8,800 new housing units were constructed nationally between 2011 and 2016. The cost of a new three-bedroomed home in Dublin currently ranges from €300,000-€450,000, while outside the Capital prices range from €140,000-€300,000 with little or no availability in many areas.
Similar to the recently introduced Rent Controlled Zones, the Government need to assess areas on an individual basis and identify locations where supply is unlikely to occur in the short to medium term.
The fact remains that despite an overall 10.7% increase nationally in the last 12 months, values in many areas still remain well below the cost of construction. In many areas, the figures are coming off a very low base and until such time as the Government creates incentives to make it financially viable to build, development sites will remain untouched.
It was recently announced that ghost estates are ‘a thing of the past but not forgotten’ with numbers dropping by 80%. This figure may be correct, however it is vital to look at where the remaining 20% are located. The areas where ghost estates have been completely eliminated are in the cities and commuter belts, where prices and demand are at their highest.
According to John Earley, FIPAV of Property Partners Earley (local agent), “an acute shortage of new homes still exists in many counties and this will continue to be the case for the foreseeable future. Simply waiting for values to return to a point where a profit can be made is an extremely negative approach and will deny many people the opportunity to remain in their locality.”
The cost of constructing a 3-bed s/d residence outside the Capital costs of €200,000-€250,000. The average value of a 3- bed s/d currently stands below €200,000 in 20 out of 26 counties in the country. This is despite the recent increases in value. In some areas, it will take up to five years before construction will become viable again. The Government however, have confirmed that they want young people to consider remaining in their own locality.
According to John Earley of Property Partners Earley (local agent), based in Roscommon town, Co. Roscommon, there currently is little or no incentive for developers to provide new housing in Roscommon. The average value of a 3-bed semi-detached property stands at €80,000 in the county and €130,000 in Roscommon town.
According to John Earley, values would need to increase by a minimum of 40% before the figures stack up commercially throughout the county.
“Surely everyone should have the opportunity to purchase a new home in their own locality. This is a fundamental right for all.”
Property Partners is an independently owned nationwide group of auctioneers and estate agents. Established in 2000, the group has 30 offices across Ireland. Many of its principals are long established in their locality and have experienced the peaks and troughs of the Irish property cycle.