West Cork’s price hikes not sustainable in the long term

AN increase in Irish interest in West Cork properties, along with the drop off in overseas purchases, has changed the local market significantly.

That’s according to vice chairperson of the Society of Chartered Surveyors Ireland (Southern region) Majella Galvin, of DNG Galvin Auctioneers, Bandon.

Many house sales in the local residential market have gone for 10% or more over their guide prices, while coastal properties have gone up by over 20%, she said.

‘A large number of approved bidders are going head-to-head with one another to secure scarce housing stock, and further driving up prices. ‘While it’s a sellers’ market right now, the rate of price increases we are seeing currently is not sustainable in the long term,’ said Majella.

Majella was commenting after the SCSI Residential Property Market Monitor July 2021 shows estate agents expect a 7% increase in house prices over the next 12 months, with a majority attributing the swelling prices to a lack of housing supply.

More than 200 estate agents belonging to the group were asked for their opinion on future price trends for its July residential property market monitor report.

Stock in the second-hand market is at an utmost low. One of the main reasons people are delaying putting their property on the market is they cannot find an alternative home due to the shortage of stock in the market. Cash buyers are active seeking coastal cottages and doer upper projects.

Majella  said the cumulative impact of the slowdown on new home construction from the repeated shutdowns of the sector ‘will be with us until 2023 at least,’ with increases in the price of steel, timber, plastic and insulation products also contributing to higher prices for new homes.

‘Buyer’s preferences for homes have changed in the last 18 months.  Location is no longer the key requirement. As a consequence, we continue to see more demand for property in rural areas with large gardens and good broadband.

‘We are seeing buyers from Dublin looking to relocate to Cork as flexible working conditions continue to be the norm and they can get better value for money,’ she added.

The SCSI believe extraordinary measures are now needed to address how Covid-19 has affected housing.

It says 400,000 new homes – social, affordable and private builds – will need to be built over the next 10 years to meet pent up demand and the needs of our growing population.

‘Current output is around 20,000 units so a doubling of that will require a massive increase in funding and collaboration between the private and public sector. The SCSI supports the ESRI’s recent that the Government double its current investment in housing by borrowing between €4 billion and €7 billion a year, while availing of low interest rates,’ it said.