A halving of property price inflation and a widening value gap fast opening between better insulated homes and poorly insulated ones are the main findings highlighted by the most recent instalment of the Irish Independent/ Real Estate Alliance (REA) average house price index published on Monday.
value difference of up to €60,000 is noted between BER A- and B-rated homes and all the rest.
Both changes were to be expected given the fast souring international economic outlook and the 10-year stretch of rampant property price inflation we’ve experienced at record low interest rates.
Now we have interest rate hikes, rampant inflation across all sectors, but particularly in food, fuel, gas and building materials. It all stems from the combined instability of Brexit, the tailwind of Covid-19 and the ructions of the Russian Ukrainian War.
The REA Index was designed to show a more immediate and accurate family home price picture which focuses on the most average property type, the three- bed semi family home and on recent actual sale prices rather than asking prices. But the latest REA survey also highlighted something else that went less noticed than those headline results published on Monday: that the home type that took the hardest value hit in the last three months is that in the Dublin commuter belt.
Overall the selling price of a three-bedroomed semi-detached house across the country rose by 1.4pc over the past three months to €290,630 — representing an annual increase of 10pc.
However, this was a marked slowdown on the 2.9pc quarterly increase recorded in the preceding three months, signalling a rapid cooling of the frenetic demand in the marketplace.
In Dublin, the average value of the most average family home hit €497,500, just shy of the half a million barrier. But again the 0.8pc quarterly rise is half that experienced in the previous three months. So cooling fast.
“We have seen a definite slowdown in demand levels and the urgency that we were seeing with buyers has reduced,” said REA spokesperson Barry McDonald.
But now just look at what has been happening in Kildare, Meath and Louth, traditionally the locations most sought after by buyers working in Dublin who have been priced out of the capital.
Kildare’s average three-bed semi price remained unchanged at €361,250. Meath’s average was also frozen with 0pc change over last quarter’s €298,750. And Louth saw a reduction in its average price of almost 2pc to €260,000. Meantime, the time taken to sell in commuter counties jumped up in three months from three to five weeks.
In contrast, Wicklow, the last adjoining county, but whose property types and sea locations (particularly in the north and east) make it a premium market, saw values up 1.2pc in three months. So it’s definitely a commuter thing.
Other counties that saw the same value freezes included Westmeath, Cavan and Monaghan. With inner commuter belt prices surging in recent years, we have seen Dublin-based workers pushing out to buy in and commute from these counties also. Prices in Dundalk, also an outer commuter destination, are down 4pc in three months.
While we can likely expect most counties to touch zero growth and eventually falling prices (if our combined global woes continue); surely an accepted logic suggests that the Dublin’s traditional commuter counties should be among the last to be hit, not the first?
So what’s happening in the old belt?
Well it’s likely that the price softening is caused by three factors combining.
Firstly, it’s property affordability. If we look at commuter county prices as they stand and particularly in Kildare, they’ve exceeded the point of affordability for most mid to lower earning young couples under present lending rules. And affordability was always the point in a commuter zone: the nearest family sized home you can afford to your Dublin office desk.
The second factor causing traditional commuter belt prices to freeze or fall, is the age of the houses themselves. Most of these big estates of semis were built from the early 1990s onwards and through the Celtic Tiger years. So most estate homes have a C or a D rating which means they’re in need of retrofit. And that’s getting more and more expensive. So they’re devaluing relative to A- and B-rated property types on surging upgrade costs alone.
Last, but this is the biggie, comes the utter disruption caused by continued remote working which proved itself to such effect through the lengthy Covid-19 lockdowns. Covid-19 has faded but a good big tranche of the Dublin office working population are not back on the block. Or else they’re enjoying new hybrid arrangements which mean they have to be there just one or two days a week.
Dublin’s high-rise house prices and many of its city centre businesses rely on the city filling up with punters each and every day. Being forced to make that daily trip, whether from leafy Ranelagh, or from Clones. But a big chunk are staying away. We can already see the drain on city centre businesses and more are closing because footfall hasn’t returned to pre-Covid levels. And buyers who continue to work remotely (those born in Dublin too) can now pretty much live and buy wherever they want.
The only attraction of traditional commuter estates for both Dublin-born buyers and those born elsewhere in the country who worked in Dublin until recently, was that they offered slightly more affordable homes than Dublin within driving range of their city desk.
Commutervilles don’t adhere to ‘Location, Location, Location.’ Most didn’t buy estate homes in Kildare, Meath and Louth because they always wanted to live in those counties. They did because they had to. So with remote and hybrid working enduring, the attraction of slightly cheaper than Dublin homes in semi midland pockets an hour from Dublin is gone forever.
Because they’re now buying bigger for less in the counties of their birth. Or in the case of Dublin-born buyers, they’re choosing to enjoy better value and lifestyle in lively regional towns which they find more attractive than the outskirts of Prosperous, Co Kildare.
Lively towns where they can walk or cycle to their shops, pubs and restaurants out of hours and live within range of busy streets and cafes.
Today it’s not only Dublin’s crazy house prices that are driving people out (including young Dubliners), but the crazy price of everything. And the rip-off culture with which Dublin city centre traders (and many in its suburbs) have already slit their own throats. The tipping point has already happened. Look at previously heaving city centre pubs now empty on Friday nights with just the occasional tourist sipping a €6.90 Guinness and picking at a €3.50 packet of gimmick craft crisps.
Look in the cafes and convenience store delis where it’s €4.50 for a cup of coffee and €6.50 for a limp ham sandwich. Where parking a car costs more than a taxi trip (if you could get a taxi). Where a bland mid-range restaurant meal costs more than a top table nosh-up in Cannes, San Tropez, or any European playground of the super rich. Where a cinema trip with the kids costs €100.
Where it’s an utter ruck to do anything at all, be it trying to get children into overcrowded schools or creches which have no places; visiting a GP or planning a simple night out with the hope of being able to get home again.
And in the same way the houses are only slightly cheaper in the commuter belt, so too is that bigger picture only slightly better. Ragged run donkeys dormering in the middle of bloodstock equestrian country, not by choice, but by necessity. Until now.
The endurance of remote working means Dubs are now just as likely to plump for a five-bed house in Ennis or Sligo; as are a Clare- or Sligo-born couple. In towns where a pint and a sandwich, and almost everything, along with a house, costs half as much, with more craic and half as much bother.
More proof: the same REA survey shows that prices in large lively towns rose the most, by 2pc to 4pc. We’re talking an average three-bed price of €207,207, 40pc less than a Kildare estate with nothing going on. Also a full quarter of purchasers in regional towns came from outside the county. Some are calling the phenomenon ‘decommuterisation’.
Regional towns to get livelier, Dublin to get old and gummy. And a triple whammy for commuter-belt homes whose value has always been directly chained to a desk in the city centre.
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