SCSI publishes Annual Property Report 2012

INCREASE IN FAMILY HOME PRICES IN DUBLIN BUT FURTHER DECLINES REGIONALLY IN 2012

ACTIVITY IMPROVES FOR PRIME COMMERCIAL SPACE BUT VALUES DECLINE OVERALL

CONTINUED INCREASE IN LAND PRICES AND ACTIVITY LEVELS

Wednesday: The average prices of family homes in Dublin stabilised and marginally increased in 2012 while there were further declines in house prices around the rest of the country, albeit at a slower pace than 2011, according to the Society of Chartered Surveyors Ireland (SCSI) annual survey of its estate agent members.

Residential Property – Lack of availability of family homes remains a key issue

The SCSI Annual Property Survey suggests that average prices of second-hand three and four bedroom semi-detached family homes in Dublin increased by 2.7% and 1.1% respectively in 2012, compared to declines of 12.6% and 13.6% in 2011.

  • In Leinster, the average price of a second-hand 3-bedroom semi detached house declined by 7.7%. This compared with a 16.8% decline in 2011.
  • In Munster, the average price of a second-hand 3-bedroom semi detached house declined by 7.6%. This compared with a 9.3% decline in 2011
  • In Connacht, the average price of a second-hand 3-bedroom semi detached house declined by 7.1%. This compared with a 15.2% decline in 2011.

The SCSI said that the Mortgage Interest Relief (MIR) deadline stimulated demand in the final quarter of the year and that a lack of supply of family-type homes, particularly in Dublin, led to modest price increases in certain areas.

Roland O’Connell, President of the Society of Chartered Surveyors Ireland said the figures showed that Ireland in 2013 was no longer dealing with a property crisis, but the legacy of that crisis.

“How we deal with the legacy issues under our control will have a major bearing on the future of the property market in this country.  2012 was very much a year of transition with increasing levels of both commercial and residential transactional and rental activity being experienced by a growing number of agents in different sectors.

The lack of uniformity in property values and the emergence of ‘micro markets’ – suggests that there will not be a single point at which the market hits the floor and recovery begins. Rather different types of property in different regions will experience variations in peak-to-trough prices and will recover at different times” O’Connell said.

O’Connell pointed out that increased demand in 2012 from people wishing to move from rented accommodation to purchase family homes and a shortage of suitable property in some urban areas led to price stabilisation and even modest increases in some of these ‘micro-markets’.

“However, the situation around the country is less certain. While the rate of decline has slowed, values continued to drop and it remains to be seen if there will be a stabilisation later in 2013 and what effect the Local Property Tax (LPT) will have on property values” he said.

The SCSI survey also suggested that there continued to be strong levels of activity in the residential rental market in 2012 with rents increasing by an average of 1.3% nationally and 3% in Dublin.

“Family homes are in demand for rental, tenancies are typically lasting longer and a new trend whereby people are renting out their home and renting another property, either a larger home or closer to workplaces is emerging” O’Connell said.

Commercial Property

According to the SCSI/IPD Index, 2012 was the first year of positive returns for the Irish market since 2007. However, activity levels in the commercial property market were relatively low in 2012, particularly in relation to older stock in secondary locations.

  • In Dublin, rents for prime 3rd generation offices declined to €310  per sq metre in 2012 from €320 in 2011
  • In Dublin, prime city retail rents declined to €4,135 per sq metre in 2012 from €4,532 in 2011
  • In Leinster, prime city retail rents declined to €303 per sq metre in 2012 from €374 in 2011
  • In Munster, prime city retail rents declined to €907 per sq metre in 2012 from €974 in 2011
  • In Connacht, prime city retail rents increased to €1,820 per sq metre in 2012 from €1,813 in 2011

O’Connell said that while market rents experienced further declines in 2012, Foreign Direct Investment (FDI) companies were continuing to drive demand.

He also said that the lack of supply of new prime stock and the availability of finance remain the key issues in terms of a broader stabilisation in the commercial market.

“We hope that more suitable property will be brought to the market and welcome the possibility of the potential  introduction of Real Estate Investment Trusts (REITs) as a means of improving liquidity in the market”, he said.

Agricultural Land

Agricultural land performed well again in 2012 following on from strong performance in 2011. The SCSI survey suggests that the average price per acre with entitlements (up to 100 acres) was €9,768 in 2012 compared to €9,662 in 2011.

The national average for agricultural land now stands at approximately €10,000 per acre with or without entitlements.

“The agricultural land market is one of the stronger performing sectors of the property market and 2012 followed on from the high levels of activity in 2011 relative to other sectors of the property market. This was primarily driven by demand from cash-buying farmers as a result of strong food export growth”, O’Connell concluded.

The full report is available at: http://www.scsi.ie/SCSIAnnualPropertyReport2012