Apartments in Elm Park, D4 and The Grange in Stillorgan are among those being offered at cut rates to buyers, writes Orna Mulcahy
TWO OF the country's largest developers are offering financial packages to buyers in an effort to kick-start the new homes market.
In Dublin 4, two-bedroom apartments in the Elm Park development on Merrion Road, have dropped at least 20 per cent to €470,000 with developer Radora offering buyers loans at zero interest of between 20 and 30per cent of the selling price. Radora is controlled by Bernard McNamara along with Gerry O'Reilly and David Courtney.
Meanwhile Ray Grehan of Glenkerrin Homes is offering buyers a 15 per cent interest-free loan for up to seven years on luxury two-bedroom apartments at The Grange in Stillorgan which are being sold at 2005 prices, of €525,000.
The deal, which is backed by the Construction Industry Federation, is being offered across other Glenkerrin-developed properties including Ballintyre Hall in Dublin 14 (starting price €395,000) and St Edmunds in Lucan (€235,000).
The deals send a clear message to the housebuilding industry which has been crippled by the shortage of mortgages and by the deteriorating market conditions.
"There are two problems with this market - lack of money and lack of confidence," says Ray Grehan. "If we can provide one, we might be able to help the other. Sales have come to a halt because the banks will only lend 80 per cent and so people are having to come up with 20 per cent deposits. On a €300,000 property that's a €60,000 deposit and people simply do not have that money in savings. We're trying to bridge that gap."
Under the new scheme, buyers in Glenkerrin's developments will have to pay a 5 per cent deposit, and will then be offered a deferred payment of 15 per cent by way of an interest free loan to be repaid at the end of seven years. The purchaser owns 100 per cent of the of the property, with the developer's loan secured by way of a second charge on the property. The mortgage process will be administered by Savills HOK.
The incentives are being launched as banks take a more aggressive policy on development funds. The major financial institutions are now anxious that the large number of apartments and houses overhanging the market get cleared even if it means reduced profit margins for developers. In some cases, housebuilders are being pressurised to sell units at cost rather than to allow them to remain vacant indefinitely.
According to one new homes agent, Dublin now has a three-year oversupply of new houses and apartments on the market, while potential buyers are determined to hold off until the market bottoms out.
The substantial price cut at Elm Park could trigger sales, as it's a major mixed-use development in a premium location that is likely to weather the downturn better than most. Built on land previously owned by the Sisters of Charity at Merrion Gates, Elm Park has picked up an architectural award for its commercial blocks, but its 330 apartments have been slow to sell. Many of these were reserved from plans as far back as 2004 but not all the reservations translated into sales as the scheme neared completion last year.
In recent weeks two-bedroom units at Elm Park were listed on myhome.ie at €585,000. The adjusted price is being seen as "extremely keen" by rival new homes agents who will clearly have to encourage their building clients to cut their prices accordingly.
"The building industry needs a solution and it has come up with the solution now," says Elm Park sales agent Ken MacDonald of Hooke MacDonald who expects to sell 60 to 70 units under the scheme.
"I think it could have a dramatic effect on the market. It's a creative way of helping the purchaser to buy and it could bring a bit of confidence back into the market. The developers are the ones who are having to take the pain. It is so attractive to purchasers that other developers will inevitably follow suit."
No deposit is required at Elm Park, where purchasers will get up to 30 per cent of the purchase price as a loan with zero interest for five years.
"If the developer gives 30 per cent on a €470,000 purchase, the buyer only has to put up €329,000 which is very enticing." says MacDonald. " Repayments (capital interest) on a 30 year mortgage of €329,000 would be €1,840 per month which is very close to the typical two-bed rent at Elm Park of €1,650 per month," he said. "The target market will be owner-occupiers. We see parents living in the area who want to help their children get on the ladder. Under this scheme they don't have to put down any money."
