The pictures that appeared in all the Irish papers last week of people queuing for several days to be first in line when some new houses went on sale last weekend seemed to be visible proof that the Irish love affair with property is back in a big way.
We have not seen pictures like this since the height of the property boom when long lines of people queued up to buy over-priced houses and apartments. Pictures don't lie and these pictures seemed to be saying that, yes, a new housing boom is starting.
But it's not that simple.
The queue started on Tuesday/Wednesday of last week, when some people arrived with fold-up chairs and blankets and prepared to spend several days and nights in a line to be sure they would get their choice of one of the houses that were to be released for sale on Saturday. The houses are part of a new estate called Millers Glen on the outskirts of the town of Swords in North County Dublin which is now a major suburb of the city.
Eventually there will be over 1,000 new homes in this new estate, but this first phase is of 60 homes which meant that the half dozen people in the line would definitely get a house, assuming they had either cash or had arranged a mortgage. The line was more about getting particular houses in the estate than a fear of not being able to buy anything.
And that is exactly what happened. The people in the line got the houses they wanted and there are plenty more of the 60 houses in the first phase of the new estate still available.
There were a few factors behind all the excitement. First is that the houses are new builds near Dublin, not leftovers in some ghost estate in a distant area where no one wants to live.
They are significantly bigger than many of the shoebox houses that were built during the boom. And they are also built to the higher standards which are now mandatory under new building regulations introduced recently.
This means that they have a high rating for energy saving due to better insulation, and that will result in much lower heating bills (solar panels are part of the design).
As we said, they are also more spacious at around 1,300 square feet for three-bedroom homes, unlike the 1,000 square feet 3-bed homes that were frequently built during the boom. Plus they have sophisticated finishes, fitted kitchens, utility rooms and good gardens.
Most important, they are reasonably priced at around €280,000 ($360,000) for a 3-bedroom house (there are also two bedroom and four bedroom houses in the scheme).
All of which means that they are very attractive for young buyers desperate to find a good home in a nice area not far from the city. There are almost no new houses available in or near Dublin at the moment because no new houses have been built in the past six years, hence the willingness of some buyers to queue up for several days and nights.
The bust in the property market here saw house prices fall by over 50 percent since 2008, developers and builders going out of business, people who had bought at the top of the boom ending up deep in negative equity and the whole housing market grinding to a complete standstill.
No new houses were being built for the next generation of would-be homeowners. To make matters worse, the banks stopped lending and it became virtually impossible for young couples to get a mortgage.
The secondhand housing market also came to a stop. Older people who owned their homes and might want to downsize or move did not want to sell because prices had fallen so much. Better to sit it out and wait for prices to come back up again, they thought.
The result of all this was that the number of houses being put on the market dwindled to a trickle over the past few years. The market simply seized up. No new houses were being built, very few older houses were being put on the market, and there were no loans available to buy houses anyway.
All of this was a disaster for young couples who wanted to buy their first home. And rents were also affected because with fewer people able to buy, more people wanted to rent, so rents climbed sharply over the past two years.
The severe shortage of older houses being put on the market has also seen prices rising sharply for the few that do become available. In the past two years prices for houses in many parts of Dublin have climbed by over 20 percent.
But it is important to understand that the reason for this is that so few houses were being put on the market. This has resulted in mini price bubbles in some areas, but they are not going to last.
Outside the capital and other favored areas the price rises have been much slower, but statistics show that in recent months property prices all over Ireland have turned around.
That has led to headlines here suggesting that a property recovery – perhaps even a boom – is underway. The headlines about 15 to 20 percent price rises over the past year are accurate, but these mainly refer to choice areas in Dublin.
What is driving these price rises is shortage of supply. As more houses are put up for sale, this dramatic climb in prices will slow to a more reasonable level.
The other thing to bear in mind is that the recent dramatic statistics about 20 percent year on year price rises refer to a very low base. If you bought a house for €500,000 near the peak of the boom in 2007 it might have been worth around €250,000 a year ago. And if it is in an area where prices rose 20 percent in the past year it is now worth €300,000. That means you are still down €200,000.
There are thousands of people here who are deep in negative equity, and many of them are struggling or failing to pay their mortgages. Of course they are hoping that we are now entering another property boom which will rescue them. They want to see prices rising as fast as possible.
But it is unlikely prices are going to get anywhere near their boom time highs anytime soon, and perhaps not for many years to come.
The news that property prices have turned around has one very positive result, and that is that builders are once again starting new developments.
There are problems, however, because so many builders, including almost all the big developers, have gone bust with their loans transferred from the banks into Nama, the national bad bank.
The new development of 1,000 homes in Swords where people were queuing last week is being developed by Gannon Homes, once one of the country's biggest developers but now in Nama.
The developer, Gerry Gannon, who owned large land banks around Swords when he went bust, is now effectively working for Nama, which is releasing funding for him to build the development of new homes. Nama is working in a similar way with other big developers whose loans it controls to enable projects to be completed and new projects to be started on land they owned.
But it's a slow and difficult process in some cases, not least because some of these developers are completely bust and there are legal complexities involved.
So despite the pictures in the papers here of eager buyers lining up for new houses, we are not seeing the start of the kind of housing boom madness that culminated in the crash of 2008.
What we are seeing is a definite recovery, prompted by the greater confidence given by the recent signs of growth in the wider economy (the most recent figures show that tax revenue is running well ahead of estimates, indicating that people are starting to spend again).
It's going to take some time for the supply of new homes to match the demand, and that will mean strong prices in the meantime. We are likely to see incentives and changes in the budget next month to enable more developers, even ones who went bust in the crash, to start building again without delay.
Overall we need around 80,000 new homes to be built in the next five years, based on population projections, on top of the pent up demand we already have from young couples who have been unable to buy over the past few years.
Continuing strong prices will see many more secondhand homes being put on the market in the coming year, a trend that is already visible. In some choice residential areas in Dublin where 'For Sale' signs have been few and far between in the past few years; they are now starting to pop up all over the place. This increasing supply will dampen prices in time.
All told, we are in for a few sticky years in the property market here as supply struggles to meet demand. But there will be no going back to the madness of the boom years.
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