The outlook for 2008
by Kate Hutcheson

In late 2006 a combination of factors, multiple interest rate hikes and uncertainty regarding stamp duty being the two most notable, brought about a downturn or correction in the property market.

This changing climate continued into 2007 with falling prices, continued interest rate increases and further stamp duty speculation as the property market became an election issue. In our opinion this resulted in Dublin North West prices falling by approximately 10%. However, this fall could be viewed as a correction of the market as vendors had become accustomed to expecting offers in excess of their asking prices and increases of more than 10% year after year which most economists viewed as unsustainable growth.

In the six months from January to June 2006, before uncertainty had crept into the market, prices had increased by a staggering 10% in that period alone. Having become so accustomed to dramatic increase vendors were slow to reduce their asking prices. It wasn’t until the latter half of 2007 that we saw vendors adjust their expectations and reduce their asking prices, which resulted in some improvement in sales activity. More recently we have seen the budget bring about more favourable stamp duty rates and also eliminate stamp duty speculation from the market.

The outlook for 2008 looks somewhat brighter with a combination of positive factors prevailing - stamp duty speculation is eliminated, lower stamp duty fees, fears regarding interest rate hikes have abated, vendors expectations have become more realistic and most economists predicting good growth for 2008.

It is worth noting that affordability in Dublin North West has improved immensely due to the fall off in house prices and now buyers have more opportunities to purchase property closer to the city centre. This coupled with the cost of rental accommodation continuing to increase should see people consider purchasing in 2008.

The average letting value for a three bed had increased from €1,200 per month to approximately €1,500 per month. The average sale price on the other hand of a three bed house has decreased from around €485,000 to €435,000. This should attract investors into the marketplace in 2008 as rental income has increased and repayments, by virtue of reduced prices, have decreased. Other factors which may encourage purchasers back into the market this year include the ample choice available, the reduced chance of having to bid against other parties, and stabilisation of prices.

In conclusion, as confidence returns, we expect 2008 to remain steady, we do not foresee house prices increasing but with more favourable factors now prevailing we do expect to see better movement of property in a level market.

Kate Hutcheson BSc(Surv) M.I.A.V.I.is a Senior Negotiator with Flynn & Associates Ltd.

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