Market Review from Sunday Business Post
14th December 2020
A market changed, changed utterly
Sunday Business Post, 13th December 2020
From most of the country working at home to virtual viewings stripping out the ‘timewasters’, 2020 was a year in which the game was changed like never before.
Quality broadband and remote working possibilities replaced commuting strategy and location as the drivers of an extraordinary year which outperformed all expectations despite the Covid crisis.
As demand continues to drastically outstrip supply, we hope a new wave of those too apprehensive to sell this year will relieve that pressure valve in 2021.
January and February will also bring a changing dynamic as mortgage exemptions come into play, adding to the current exceptional levels of demand.
Looking back on the last 12 months, we witnessed changing behaviours which saw city workers move in their droves to their native counties as the work-from-home revolution swept the country, virtual viewings eliminated ‘time wasters’ from the market, and buyers increasingly used live apps to be first in line for new properties.
In the midst of the pandemic we feared a massive property market crash, akin to 2008, when in fact, amazingly, we witnessed demand levels higher than I have seen in my career.
Pent-up demand saw the time taken to close sales fall from a high of ten weeks in Q1 and Q2 to under four weeks in many areas at present.
The upsurge in demand was encapsulated by REA agent Harry Sothern in Carlow, who recently reported 19 properties in the sale-agreed bracket, but only eight houses actively for sale – the first time sale-agreed properties were more than double those actively for sale.
Industry protocols requiring potential viewers to produce proof of funds helped to eliminate those with no intention of buying, significantly speeding up the sales process.
Technology also brought a fresh approach to the sales process. Virtual tours provided a superb marketing tool, but most serious buyers still want to physically inspect properties, and to act fast once they saw what they wanted.
Putting a house on the market in early December would previously have been considered naïve. However, this year, we have seen houses come to the market in the last two weeks that will be sale agreed before Christmas.
People are watching the market very closely, and we find that as soon as we put a property up on our sites, the majority of the enquiries come within the first 48 hours.
Our REA average house price survey saw average house prices return to growth, in Dublin in particular, with an increase in activity in the first three months of the year.
By mid-year, a new phenomenon emerged with remote working fuelling an unexpected demand for homes as buyers began to leave the capital and either return to their roots nationwide or search for more space. Gardens, potential home offices space and broadband reliability were the key factors behind the surge in interest.
This shift toward rural areas was probably one of the more interesting points from the housing market in 2020 and looks set to continue.
By the end of quarter three, the time taken to sell properties had fallen dramatically as buyers chased a limited supply before their mortgage offers expired.
The average three-bed semi reached sale agreed after just seven weeks, a significant fall from the ten-week average in June – with our agents now reporting that the figure has fallen further to an average of four weeks.
Average prices across the country between July and September rose by 0.6 per cent to €236,046, with Dublin prices for the same type of home rising by 0.5 per cent to €429,333.
The biggest increases in the capital came in South County Dublin, where prices rose by over €3,000 to €416,666, up 0.8 per cent on Q2.
Three-bed semis remained static in Cork, Limerick and Waterford cities, but Galway saw quarterly inflation of 0.5 per cent, with selling prices rising €1,500 to €285,000.
In 2021, the reality facing buyers is that the market remains unbalanced as demand races ahead of supply. But those who deferred selling in 2020 on account of the pandemic may alleviate that pressure in the next 12 months. Some empty nesters, many of whom wouldn’t mind downsizing, are deferring that decision because of Covid-19.
Barry McDonald is REA spokesperson and a director at REA McDonald, Lucan, Co Dublin