Home Brokers

Statement by Marian Finnegan,
Chief Economist,
Sherry FitzGerald Group,
Thursday, October 1st 2009

The correction in the residential housing market continued over the summer months however the rate of decline moderated further on the quarter two results, according to Sherry FitzGerald Ireland’s largest estate agents.

• The results from the Sherry FitzGerald index reveals that the average price of a secondhand property in Dublin fell by 4.5% in the second quarter of the year compared to a drop of 5.5% in the previous quarter and 9.5% in the opening months of the year.
• The comparable figures for the national market saw that average price of a second-hand house in Ireland fell by 4.5% in the quarter, compared to 5.2% in the second quarter and 8.3% in the opening months of 2009.
• From the peak of the market in 2006, Dublin house prices have fallen in real terms by 44%, while the national market has corrected by 39%.
• This in effect means that prices are back at levels achieved in quarter one 2004. 90% of the homes transacted in the market were purchased by owner occupiers.
• Notably first time buyer bought 53% of the properties traded in that period, compared to only 38% during the same period in 2008.
• An analysis of the profile of vendors who sold their property through Sherry FitzGerald in the first nine months of the year revealed that 26% of vendors were selling investment properties, this compares to 25% in same period in 2008.
• Approximately 22% of vendors sold with the intention of purchasing a larger property, which is interestingly the same proportion as 2008.
• Approximately 18% of vendors were selling their home to relocate to a different county within Ireland.

Commenting on the results, Marian Finnegan, Chief Economist, Sherry FitzGerald Group said;

“The pace of price correction has moderated notably from the beginning of the year. Transaction levels in the market were stronger than anticipated during the summer months, a period which is traditionally very quiet. Consumers are more value conscious, and have researched the market extensively as a result appropriately priced properties are trading well. The stock of available second-hand properties is continuing to decline with limited new properties coming on the market in the autumn season. There will undoubtedly be many challenges in the months ahead but the first indications of a gradual stabilisation in the market are emerging.”

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Today (23/09/09), the Irish Auctioneers & Valuers Institute (IAVI) has called for the establishment of a Tenancy Deposit Protection Scheme, similar to those available in the UK, and voiced its concern over recent proposals to require the payment of deposits on tenancies to the Private Residential Tenancies Board (PRTB).

According to IAVI Vice President Mr Kersten Mehl, “While we support any regulation that will improve fairness and transparency for landlords and tenants in relation to deposits we do not believe that the PRTB should administer this system.

“According to PRTB figures, it is currently taking up to 16 weeks to process a tenancy registration and anecdotal evidence from our members suggests that it can take up to six months in certain cases. With this in mind, we have serious concerns regarding the ability of the PRTB to operate an efficient deposit protection scheme that can return deposits within three working days, which would be the timeframe usually expected by tenants.

“However, we would welcome the establishment of a Tenancy Deposit Protection Scheme, operated by an independent body, which would reduce the number of disputes in relation to deposit retention and would provide a greater level of protection to both landlords and tenants,” he said.

Under the UK Housing Act 2004, all deposits taken by landlords and agents for assured shorthold tenancies (AST) in England and Wales must be protected by one of three an authorised tenancy deposit schemes. The Deposit Protection Service (DPS) is a free custodial service, which is funded by the interest earned from deposits; Mydeposits and the Tenancy Deposit Scheme (TDS) are insurance-backed deposit protection schemes, whereby the landlord retains the deposit and pays an insurance premium.

“There appears to be a lot of ambiguity among the general public, tenants and landlords in relation to the retention of deposits under the Residential Tenancies Acts (RTA). In a recent submission to Government, the IAVI recommended that the Residential Tenancies Acts should clearly specify guidelines for the return of the deposit. This would speed up the resolution of deposit disputes under the current system,” he said.