House buyers will commute for lower prices: REA surveyMonday 28 March 2016 15.46
A new wave of house buyers are prepared to commute for over an hour from Dublin to secure affordable properties, according to a national survey carried out by Real Estate Alliance (REA).
The Q1 REA Average House Price Survey has revealed price rises in outer-commuter-ring locations such as Laois and Offaly are being driven by Dublin-based first-time buyers being forced further out from the capital by the Central Bank's deposit rules.
REA also report seeing a decrease in the amount of first-time buyers between the ages of 25-40 attending viewings in the Dublin housing market in the first quarter of 2016.
The average three-bed semi nationally now costs €191,194, a rise of €2,824 (1.5%) on the figure to the end of December.
The average price of a three-bed semi in Dublin City and County has risen by 0.6% from €332,000 to €334,000 in the first three months of the year.
This activity is driven in part by new building activity in the north of the county and pockets of south Dublin which have seen the return of the cash buyer to the market.
The proportion of cash buyers in the Dublin market has risen for the first time in two years, from 33% to 36% over the past three months, with some areas such as Dublin 6 and Dun Laoghaire registering a 10% increase in cash purchasers over the past three months.
The Central Bank's deposit rules and the lack of suitable supply are continuing to stagnate the market for mortgage buyers in the capital and commuter areas.
While prices have risen slightly by €2,706 (+1.31%) to €209,559 in the commuter counties and main cities such as Cork and Galway, these rises are confined to the few towns that have new developments on the market.
The biggest growth has been in towns in the rest of the country where prices have risen by 9.58% in the past year, and 2.59% since December, with the average three bed semi increasing from €122,161 to €125,321.
However, REA agents around the country state that many local rises are now being caused by lack of stock driving up prices.
"We are seeing a marked absence of the 25-40 year olds at viewings in the capital over the past few months as, under the current Central Bank restrictions, they are finding it impossible to raise the deposits needed to purchase houses over the €220,000 limit," said REA chairman Michael O'Connor.
"Conversely, we are seeing growth in commuter interest in counties previously considered at the edge of the daily travelling limits such as Laois (€125,000 +4.17%) and Offaly (€140,000 +3.7%), simply because the price is right.
"Louth is the perfect example of this trend in commuter migration. Drogheda prices remained static at €197,500 in Q1 while commuter interest caused prices to rise by €10,000 to €135,000 in Dundalk, which is 35km further away from Dublin but over €60,000 cheaper on average.
"Although supply is extremely limited, suitable properties are now being bought in these areas by buyers who are prepared to travel over an hour to work in the capital.
"Lack of supply of suitable housing is the paramount issue nationwide, and while we have had rises in many areas, they are primarily driven by buyer competition for low supply," he added.
With prices rising by 5.1%, and viewings up substantially, Limerick was Ireland's fastest growing city in Q1, with three-bed semis increasing by €8,000 to their current level of €165,000.
Growth continued in Cork city (+1.75%) and Waterford (+1.61%), while the market in Galway remained static in Q1, with no new developments expected in the Connacht capital until 2017.