Sunday 23 March 2008

Dublin housing glut totals €3.6bn

A TOTAL of 8,000 new apartments and almost-completed houses, valued at 3.6bn, across more than 100 building developments in the greater Dublin region remain to be sold as the last stage of the spring buying season gets under way following the Easter weekend.

The estimates, which were prepared by leading property figures in the capital for the Sunday Tribune, are the first glimpse of the challenge that faces house builders after sales of new homes all but came a stand still up to the end of last year. The figures also give an insight into the exposure Irish banks still face in loans to residential building schemes in the capital and surrounding commuting counties, including parts of east Meath, east Kildare, southern Louth, and north Wicklow.

However, the lenders, builders and agents will be cheered by evidence that the unsold stock of new homes overhanging the capital's new housing market has been reduced significantly since builders started slashing prices on their new build schemes in recent weeks. Leading property agents and builders, who did not wish to be named, said that the overhang of new homes and apartments has fallen by 2,000 units since the start of the year.

"The peak was 10,000 units of unsold new housing units at the end of last year. But since Christmas many developers completely smashed their prices.

New homes are selling at last and we have reached the bottom now in terms of prices and that has stimulated sales, " a senior property figure said.

"Practically nothing sold this time last year, " he added.

Established builders Albany Homes, Park Developments, Capel Developments and Manor Park Homes either cut prices of apartments by up to 100,000 or marketed new homes in headline grabbing promotions at competitive prices since January.

Experts say prices have been cut by 15-25% in some schemes in the last three months. Significantly, increased supply has stopped as few big schemes have started but it will take some time for the stock to be cleared. Property agents hope that new home prices will start creeping up at end of this year as the overhang of unsold stock in some city areas is cut.

On sales of second homes, leading agents said that the picture was mixed across four broad price bands.

Simon Ensor, director at Sherry FitzGerald, said sales activity for second homes costing up to 500,000 had "definitely" been stimulated by the budget cuts in stamp duty and was "quite active and busy".

Sales of houses of 500,000 to 1m had improved considerably from this time last year but remained "patchy" in the capital, Ensor said, as potential buyers have delayed purchases or remained nervous about selling their existing homes.

Activity in house sales valued at 1m to 3m had also improved but was "the most difficult of the four" bands, he said.

Ensor added that sales of second homes above 3m to 10m "had remained remarkably resilient".

Ronan O'Driscoll, a director at Savills Hamilton Osborne King, said: "I think that next year will show an increase in prices, as supply of housing dries up."

Paul Murgatroyd, economist and partner at Douglas Newman Good, said the length of time it took houses to sell in Ireland, from first marketing to initial agreement, had increased to an average of 115 days last August from only 47 days at the peak of the housing boom in mid-2006. At the end of 2007, the average time to sale had stretched to 132 days.

Sunday Tribune

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