THE RESIDENTIAL market in Limerick in 2023 can be summed up by a story published in the Leader in December with the headline, “Couples sleep in cars to buy new homes in Limerick village off plans”.
There is huge demand in the city and county and not enough supply.
In scenes reminiscent of Celtic Tiger times, the majority queueing in the early hours for houses in Camoge Park, a new development in Croom, were young couples. GVM’s Paul Crosse completed sales totalling €4.5m in a couple of hours.
Ailbhe O’Malley, Sherry Fitzgerald; Tom Crosse, GVM; Lisa Kearney, Rooney Auctioneers and Pat Dooley, REA Dooley Group all kindly shared their insights with the Leader.
Mr Dooley said he expects average house prices to keep rising during 2024, albeit at a more moderate level.
“Prices for bigger homes (€450k plus) should plateau this year if they haven’t already. Stock will remain very tight and demand – particularly in the first-time buyer market – will be strong,” said Mr Dooley.
Mr Crosse reported a very successful 2023 with the residential market holding up very well despite multiple interest rate increases.
“The early part of the year was a tad sluggish as buyers adopted a wait-and-see type of attitude in the hope that prices may correct downwards. This did not happen with quarters three and four in particular proving very strong as interest rates began to stabilise,” said Mr Crosse, who pointed to recent high profile job announcements in the city.
“These have underpinned confidence in the property market. Ever-increasing rents also pushed many buyers down the purchase route. In many instances now, mortgage repayments are cheaper than monthly rents.
“The Help-to-Buy and Shared Equity schemes are also proving hugely popular with aspiring buyers giving them the ‘leg up’ in their purchasing journey,” said Mr Crosse, who concluded by saying transactional evidence suggests that prices increased by 7% in 2023.
Ms Kearney, of Rooney Auctioneers, provided some notable sale prices that reflected the demand. They include a three-bedroom semi-detached house in Dooradoyle listed at €265,000 but selling for €336,000 – an increase of €71,000.
Another example was a four-bedroom detached abode in Castletroy that was listed at €425,000 but sold for €97, 500 more.
Ms Kearney said the number of properties available to buy at the end of November was 92 in Limerick city, 76 in the suburbs and 253 in county commuter towns.
“More companies equals more jobs, equals more house hunters, equals increased demand in both the owner occupier and rental market.
“There is continued and increased confidence and investment in Limerick with new jobs being announced constantly – Limerick is home to 59 IDA client companies.
“Limerick 2030 plan hopes to create 12,000 jobs in Limerick with 5,000 in part of the city centre. University of Limerick expanding into Limerick city – more accommodation needed for students,” said Ms Kearney, who noted that the median asking price for a property in Limerick is €240,000.
Ms Kearney said demand continues to be buoyant with many first-time buyers desiring new homes, “middle movers” on the hunt for detached / larger semi-detached home and “right sizers” targeting smaller properties with less maintenance.
She said properties that require work are slower due to remedial/renovations costs, maintenance, low energy ratings and rising energy costs.
Interestingly, Ms Kearney said in April the average mortgage approval was €283,700, up 9.4% on the year and now above Celtic Tiger era levels for the first time.
Looking into her crystal ball, she said demand will remain strong in 2024. “Supply shortage will remain a major concern.
Forecast of annual residential property price inflation of 1.5% – 2%. Prices will continue to rise or at least remain steady due to the lack of constant supply and forced competitive bidding for properties albeit at a much slower pace,” said Ms Kearney.
Ms O’Malley, of Sherry Fitzgerald, concurs with Ms Kearney that supply continues to be the “key issue”.
“Despite a projected 31,000 homes to be completed this year, we remain a daunting amount away from our estimation of 52,000 homes per annum to return to a functioning housing market.
Furthermore, of that 31,000, only 9,000 homes will be available for private purchase. The remainder will be acquired for social housing or by institutional investors.
“The scale of undersupply is evident in Limerick in the fact that there were only 509 properties for sale in Limerick city and county in July 2023. This represents a mere 0.6% of the county’s housing stock.
Comparing this with the same period in both 2022 and pre-Covid 2019, stock for sale is down 17% and 42%, respectively,” said Ms O’Malley.
Looking ahead, she said it is clear that many of the issues facing the market are likely to persist.
“Rising interest rates will be a matter of concern, but an air of optimism will be present given the ECB’s recent decision not to increase further in October. It is likely that we have reached a terminal rate, meaning mortgage holders can now proceed with a greater degree of certainty surrounding repayments.
“However, elevated rates will impact the wider economy in terms of growth and employment – the full effect of which is yet to be seen,” said Ms O’Malley, who added that it is inevitable that demand will continue to outstrip supply.
“This, combined with the extension of Help-to-Buy and the reintroduction of Mortgage Interest Relief mean that we project 2024 to be another year of growth in the Irish property market,” said Ms O’Malley.
Will we see more people sleeping in cars in 2024 to ensure they get their dream new home?
Only time will tell.