Life returning to property market as prices up 10

Life has returned to the residential property market in County Meath with the latest National Housing Construction Index showing a 40 per cent increase year-on-year in the number of planning applications submitted in the county.

Commencement notices, which are the true litmus test of housing construction activity, are also up 98 per cent year-on-year locally.

While the figures relate to the period up to June 2014, Meath estate agents are cautious in their outlook for the sector despite the significant uplift in both prices and activity since the beginning of the year.

'This year, I don't think it's going to go too much more,' said Navan-based Ed Reilly, director of Sherry Fitzgerald Reilly. 'It will be interesting to see what way the New Year will be.

'We thankfully still have a good supply of stock but it's selling as quickly as it's coming in,' he added.

The potential for a slowdown in activity won't come as a surprise, however, as would-be buyers take stock of the significant rise in prices since January 2014.

'Before Christmas you could buy a very good three-bed semi for about €145,000,' said Mr Reilly. 'Recently, we sold a three-bed semi in Athlumney Castle and we got €190,000 for it so there's a big, big rise.'

John Bannon, broker-owner of Bannon Auctioneers & Valuers in Dunshaughlin, estimates that there has been an increase in value of somewhere between 10 and 20 per cent on most units, but warns that people are now buying in a 'distorted market'.

Mr Bannon has witnessed bidding wars for houses in estates where he estimates there are up to 20 properties that are 'non-performing' or in arrears.

The banks, however, have 'kicked them for touch' and this has contributed to a shortage of supply in the residential property market.

'If you're in a bidding war and the house has increased by €100,00 year-on-year, is it an accurate increase in value? I feel that we're operating in a bit of a false market,' said Mr Bannon.

Rising prices is very good news for those in negative equity, however. There have been reports of banks' reluctance to facilitate those in negative equity that wish to trade up or down.

Having a property that is worth more than its mortgage makes this a more straightforward process.

'Once prices rise a little bit more, it'll get people out of the situation where they're out of negative equity and they're able then to sell,' said Mr Reilly. 'The rising tide will lift all boats.'

However, the majority of buyers, according to Mr Reilly, are first-time buyers who 'wouldn't remember the crash in 2007, it's not on their radar'.

With the drop in property prices since 2008, and despite the upturn in the market since the beginning of this year, many of these first-time buyers are skipping the starter home and purchasing the family home early in life.

This, according to Mr Bannon, is another sign of distortion in the market.

'We're getting first-time buyers who had no property exposure and who are lucky enough to have received a loan,' he said. 'They are the people who were able to sit back seven years ago and watch the market slide and now be in a position to buy.'

However, he maintains that something is amiss when a first-time buyer is buying the end product, the family home.

'By right, they shouldn't be able to afford the end house,' he added. 'They should be buying the first-time buyer home, but a lot of those first-time buyers are buying the four-bed detached home.'

While the market may be distorted, Ed Reilly expects to see an increase in construction into next year. This should relieve some of the pressures created by a lack of supply of suitable housing.

'It's got to the stage now where it makes economic sense to build because of the prices being achieved,' he said. 'So I think you're going to see building start again in 2015.'