Bussiness
Panicked renters paying €30,000 above asking prices in scramble for housing as landlords sell up
Data collected for the latest Irish Independent Real Estate Alliance (REA) Average House Price Index shows a recent surge in landlord sales has put pressure on departing house-renters to buy a property.
In Dublin, the numbers of landlords now selling up three-bed semis has surged by six percentage points in just three months and now comprises 25pc of all sales of this house type.
Renting families put on notice as a result are scrambling to get mortgage approval and to buy a home fast before they are left without accommodation. Under time pressure, they are prepared to bid more aggressively for the suitable properties being offered for sale.
Increased mortgage availability is also fuelling the situation. Because buying is cheaper than renting, it has newly become an option for departing tenants who are finding it easier to secure mortgages because of their solid rent payment history.
However, they are paying an average of €30,000 more than asking prices to secure properties before time runs out on their leases, according to REA agents. In some cases they are “going all in” and making that jump in just one bid to drive off rival bidders, market experts say.
REA branches in Tallaght and Rathfarnham are among those underlining that properties are exceeding their value by €30,000 in the band between €250,000 and €350,000.
“Properties guiding at €320,000 are routinely selling for €350,000 simply because the buyer is under time pressure due to a notice to quit,” said managing director of REA McGee, Anthony McGee.
“And a lot of tenants are living in fear of getting a phone call from their landlord. If they are forced into the market, they are maxing out their loan approval to secure somewhere to live within their time-frame.”
It has recently been estimated that 50pc of property for sale is being accounted for by a combination of landlords selling up and executor sales.
This means an unusually high number of houses coming to the market need substantial refurbishment and upgrading, according to REA’s nationwide spokesperson Seamus Carthy.
“While we are seeing a slight improvement in stock, a lot of what is coming on the market in the capital is ex-rental and needs substantial refurbishment,” said Mr Carthy.
The condition of the house also affects mortgage draw-down.
“Those intending to buy a doer-upper are subject to different lending rules and their bank may look for proof that there are sufficient funds in place to renovate,” added Mr Carthy.
The shortage of tradespeople also means people are “looking to trade up are opting for smaller extension work in their existing properties where it is easier to source labour”, said Mc Carthy.
The survey data shows that the selling price of a three-bed, semi-detached house across the country rose by 2.3pc overall in the past three months to €315,352, which is creeping up on the 3pc typical in the same period during the heated Celtic Tiger market.
Time taken to sell nationally remains steady at five weeks as low supply continues to drive sales.
Price hikes in Dublin city were not so heated as the rest due to lower affordability. They’ve risen by 1.6pc in the last three months, meaning that the average three-bed semi in the capital is now selling at €525,500, representing an increase of 5.1pc in the last year.
Elsewhere, the sale price of an average three-bed semi in Dublin’s commuter counties rose by 1.81pc over the past three months to an average of €327,500 – three times faster than in the first three months of the year.
A total of 70pc of buyers in Kildare were first-time buyers and 50pc were from outside the county as prices rose by 5.3pc to €396,250 in the last three months, while Meath, Louth and Wicklow were either static or returned small increases.
Carlow prices increased by 2.2pc to €232,500, with agent Harry Sothern of REA Sothern seeing lower-priced homes selling very quickly, sometimes in less than one week.
In cities outside the capital, prices rose by an average of more than €5,000 in the last three months. The 1.5pc increase is equivalent to an average selling price of €333,750 – with the annual rate of increase at 6pc.
Prices in Limerick increased by an average of €10,000 in the quarter, exceeding the €300,000 barrier for the first time, with nearly every property getting into a bidding situation, according to local agents REA Dooley.
It comes as the latest Daft.ie housing report published today shows that house prices in some cities rose by up to 12pc in past year as the shortage of homes pushes up prices. A typical house in the second quarter of this year was listed for €340,398 – 6.7pc more than in the same period a year earlier.
“Our agents in Limerick report a lot of frantic bidding as potential buyers don’t want to lose out as they don’t know when the next similar property will become available,” said REA’s Mr Carthy.
“Three-bed semi prices rose by 1.3pc to €380,000 in Cork city while those in Galway increased by 1.4pc to €350,000 with agents McGreal Burke reporting a noticeable increase in buyers active in the market in the past three months.”
Homes in the country’s large towns continue to show the biggest growth, up 8.4pc on last June and 3.2pc this quarter. Prices in Kerry grew by 9pc in the last quarter alone, rising by €27,500 to an average of €332,500.
“In the last month the market has taken off again and prices have increased substantially,” said Donal Culloty of REA Coyne and Culloty in Killarney.
Castlebar recorded the largest single town increase in the survey, with three-bed semi prices rising by 12.2pc in the past three months to €216,000 and time taken to sell dropping from seven to three weeks.
This is due to historically low supply on the market, with agent Robert McGreal noting that new properties are achieving prices well in excess of second-hand residencies.
Also in that sales band, three-bed semis in Offaly recorded a €20,000 quarterly increase to €240,000, with REA Hynes noting a quick turnaround of properties which are exceeding asking prices.
The Irish Independent REA Average House Price Index concentrates on the sale price of Ireland’s typical stock home, the three-bed semi, giving an accurate picture of the second-hand property market in towns and cities countrywide.