Business we have done in the Limerick property market recently:
167 Dooradoyle Park, Dooradoyle, Limerick. Sale Agreed.
1 Keating Street, Killalee, Limerick. Sold.
10 Castlemara, Annacotty, Limerick. Sold.
Apartment 3 Thornfield, Alandale, Limerick, Sale Agreed.
28 O’Curry Place, O’Curry Street, Limerick. Sold.
Eily’s Cottage, Kildimo, Co. Limerick. Let.
Bishop Street, Limerick. Let.
116 The Strand, Ennis Road, Limerick. Let Agreed.
Good property is in low supply together with not enough new-home builds and good economic growth in Limerick has pushed values up as far as 6% with higher market prices being agreed for better quality homes in the sought after locations, such areas would be parts of Castletroy, Annacotty, the North Circular, South Circular and Ennis Road are in Limerick.
Parts of The South Circular Road may be developed. If the correct mix of homes are built, it could very much help with the housing crisis in Limerick.
3 bed semis are now making up to €320,000 and 4 bed detached homes could make the half a million range.
Numbers from 2019 say that the price of the average house actually declined, this is the first sign of a fall since the start of the economic upturn about 8 years ago. According to Daft.ie the drop was 1.2%. The drop was mostly seen in falling prices in Dublin where prices had trended upwards in the last couple of years. In other parts of the country, such as Limerick City prices actually rose, however as you go out to Co. Limerick, the property market experienced a slowdown in the last 3 or 4 months of 2019. Looking forward, it is hard to anticipate what will happen in Limerick the property market in 2020 as the supply is very much below demand. On a good note,the local economy in Limerick is performing close to full employment, which yes, is good news but it is contributing to the increase in demand.
Rural Ireland is being deeply impacted due to the intended outcome of the Valuation Act of 2015 not having happened says Pat Davitt, IPAV CEO to the Joint Oireachtas Committee on Business, Enterprise and Innovation. ‘to link commercial rates to rent being paid’ is the section yet to happen.
“Rates being applied to a property should reflect the income being achieved from it, but that is not what’s happening. With such properties the Valuation Office (VO) either does not accept the reality of the low rents or it analyses the passing rents incorrectly and then links the valuations on these properties to the tone of the valuation list that the Valuation Office itself has created, not the actual rents” said Mr Davitt before the Committee on Tuesday 28 November.
Two important changes were however made. Firstly, Section 30 of the Valuation Act 2001 has been abolished. It allowed a second appeal to the VO. Mr Davitt was not pleased with second important change and he said it undermined one of the most important intentions of the Valuation Bill 2015, which was to treat all rate payers in a fair way. The second change was to Section 19 of the Valuation Act 2001 was amended by Section 7b 5 of the Valuation Act 2015. This meant that grounds of appeal that ordinary rate payers can make in the Valuation Tribunal are now limited to appealing against the tone of the valuation list.
“In many of the re-evaluations the proposed Valuation Certificates were appealed by property owners or tenants but many of the appeals were not heard by the Valuation Office during the process. The reason for this change in the act I believe was the Vo viewpoint had been overturned by the Tribunal virtually all the time. Effectively these changes marked a conspiracy against struggling businesses in rural Ireland” says Pat Davitt.
According to Mr Davitt, notwithstanding the fact there was a horrible recession from 2007 to 2013, the countrywide rates re-evaluation and the rate purse of €1.5 billion has remained the same.
“In this period many IPAV members experienced a fall of 50% in their fee turnover, as the price of property halved and is still 40% behind where it was in 2006, with the exception of some parts of Dublin. The re-valuation process merely succeeded in taking from Peter to give to Paul” said Mr Davitt.
The Daft Rental Price Report 2019 Q4 revealed that rent fell by 0.1% in the final quarter of 2019. This is the first time since 2012 that rents have dropped quarter to quarter.
The annual rate of inflation in rents during 2019 was 4.1%, which is the lowest since 2012. Nationwide, the average monthly rent stood at €1,402 in the final three months of 2019. That is €659 more per month than the lowest since late 2011.
Across urban and rural parts of the market late 2019 trends differ. In cities in Dublin, Cork and Galway rents rose from the months of September to December but outside these three major cities, on average rents fell. Compared to end-2018 rents at the end of 2019 were 3.5% higher in Dublin, 5.5% higher in Cork and 5.6% higher in Galway. Rents were 4.3% and 3.9 higher than a year ago in cities in Waterford and Limerick respectively. Outside the cities rent were 4.7% higher towards the end of 2019 than the year before.
Nationwide the number of homes for rent keeps rising. By February 1, across the whole country, the amount of properties available to rent was 3,543. This is an increase of 10% from February 1 2018 when 3,216 properties were available to rent. This increase may be seen as good but the amount of homes available to rent on the market is still 80% down from the time it peaked in 2009.
An economist at Trinity College Dublin and the author Daft Report, Ronan Lyons, commented on the report by saying “With the election of a new government, housing – and in particular the rental sector – are likely to be key parts of the new government’s priorities. Despite the desire for a quick fix, such as rent freezes, no such quick fix exists. By worsening insider-outsider dynamics, rent freezes are likely to further harm those most affected by the shortage of accommodation. And, if somehow applied to newly-built rental homes, rent controls could prove calamitous for a country that desperately needs new rental homes but has very high construction costs.”
The average rent change from year to year has been:
The Minister of Finance has been welcomed by IPAV to extend the Help-To-Buy Scheme. They say it is extremely important to boost people’s confidence in a market that is “extraordinarily difficult for first-time buyers and for smaller builders/developers, as opposed to the few dominant strongly capital backed players”. An extension to the scheme has been called by IPAV in its pre-Budget submission.
The Help-To-Buy Scheme has been highly commended by Chief Executive Pat Davitt. He says it is a really important inclusion to the market which allows first time buyers to acquire a suitable home in a very challenging market.
Mr Davitt says “WE very much welcome the fact that the Minister has listened. Young people are severely disadvantaged in the current market. At a time when they are but starting their careers, large numbers are paying rents at levels way beyond the price of servicing a mortgage and are trying to save for a mortgage deposit at the same time, an impossible task for many.”
According to Mr Davitt, the Help-To-Buy-Scheme has currently been a huge success with the majority of the 30,875 applications received purchasing quality homes in urban areas in the €226,000 to €375,000 price range but he would have preferred if the scheme was extended to second-hand homes as well. “Such would have created greater movement in the market, benefitting new and existing home owners, and would have had a knock-on effect in freeing up more homes for rental.”
When Stamp Duty on non-residential property transactions increased from 1.5% to 7.5% on October 8th at midnight. Pat Davitt said it would be unfavourable in country areas where commercial market was yet to pick up. He said “In these areas this increase will merely add to a market already in difficulty.”
The fact that no effort was made to attempt to equalize the situation between private and commercial landlords deeply disappointed Mr Davitt.
“Consequently, the existing drift of the private landlord from the market is set to continue and is likely to escalate. Latest figures from the Residential Tenancies Board (RTB) show the number of tenancies registered by private landlords fell by nearly 6,000 or 1.8%, to 307,348 in 2018. Previous RTB figures for Q 3 2018 found there were 1,778 fewer landlords than three years previously and tenancies had declined by 8,829.”
Mr Davitt compared the commercial and private landlords by stating that commercial landlords in the build-to-rent sector are having to pay little to no tax in comparison to the 55% tax on rental incomes along with Stamp Duty and Capital Gains Tax on sales that private landlords are having to pay. Despite record high rents, many private landlords believe that investment in the private renting sector has become a severely unappealing proposition.
“Private landlords should be treated like other commercial and farming landlords who get write offs and against tax for long term leases. This has proved very successful in the farm renting business and encourages farmers to rent longer term. It would help stem flow of private landlords from the market.”