Will new house prices keep rising and, if so, by how much? These are the questions people are asking at the end of yet another spectacular year in the new homes market.
By year end, new house prices are expected to have risen by between 14 and 18 per cent in the greater Dublin area, according to the two largest estate agencies specialising in the market. However, figures compiled by the Department of the Environment suggest prices rose by just 5.8 per cent in the first six months of the year. The returns for July, August and September are not available. The experts are predicting that the rate of increase will slow in the new year as Government measures kick in and starter homes become more plentiful because of higher densities and the availability of more serviced sites. However, Ken MacDonald of Hooke and MacDonald believes there will still be a shortfall between supply and demand of around 8,000 units next year. He says prices should still rise by around 10 per cent next year compared with 18 per cent in the past year.
Ross McParland, whose agency sold 2,600 new apartments and houses over the past year, is confident that the market will remain buoyant. Apart from the continuing demand from first-time buyers, he estimates that between 30,000 and 40,000 people arriving in the country will be looking for homes.
However, he expects price increases next year will be about half the 14 to 15 per cent recorded over the past year. Ronan O'Driscoll, of Hamilton Osborne King, expects prices to rise by no more than 10 per cent next year because of a big rise in supply due to come on stream. He says strong demand for starter homes is continuing through this month as couples want to buy before the Christmas break. In HOK's latest scheme, Mount St Anne's in Milltown, 120 apartments were sold within two weeks of being launched. Douglas Newman Good says that apartment schemes with tax breaks, such as Custom House Square in the Dublin docklands, proved particularly popular with more than three-quarters of the units selling over a single weekend. As interest rates are close to a peak, this would be good news for borrowers looking to finance their first homes. The three agencies dismissed a report published last week which said prices were falling in some developments. They cited the higher labour and construction costs in recent months as one of the reasons builders would not be setting lower prices. Builders forced to hand over 20 per cent of their sites for social housing since the third Bacon report have also warned it could lead to higher prices.
Despite the pent-up demand for new homes in Dublin this year, the number of those completed has remained at nearly the same level as last year. The areas showing most growth are Meath, Kildare, Louth, Wexford and Cork.
The shortage of apartments in Dublin city centre is expected to continue next year due to a lack of sites and an increasing tendency by house builders to opt for commercial rather than residential schemes to avoid handing over part of their land for social and affordable housing. Despite Government intervention, it seems unlikely that the new homes shortage will be off the agenda before the next general election is called.
