Spring is usually a busy period for estate agents, but this year activity looks like being much lower.
At this time of the year, estate agents would normally be gearing up for their busiest period: the spring selling season.
But, given the performance of the market in recent months, this is likely to be the quietest spring the property sector has experienced in many years.
Research from property firm Daft.ie last week confirmed the shift from a seller’s to a buyer’s market. According to its research, while the asking prices of the properties listed on its site remained largely static during 2007, the prices they actually sold for fell consistently.
Falling prices and falling confidence in the market resulted in a large build-up of properties available for sale, with supply peaking in September.
According to Daft.ie, there has been a small reduction in stock levels over the past three months, and the firm believes this may indicate a ‘‘tentative’’ increase in activity.
‘‘Sellers can no longer expect to achieve 5 to 10 per cent more than their asking price, as they might have up to late 2006,” said Ronan Lyons, economist with Daft.ie. ‘‘Now, at the start of 2008, sellers are typically expecting 5 to 10 per cent less.
‘‘Anecdotal evidence had suggested that many sellers were resisting offers below their asking prices for most of 2007.The recent fall in stock, however, may be the first sign that vendor expectations are adapting to the new situation.”
Ronan O’Hara, manager of the Blackrock and Dun Laoghaire branches of estate agent Savills Hamilton Osborne King, believes that vendors are now much more realistic about what their properties are worth, given the state of the market.
‘‘The public are very clued in now - they realise that the market is what it is, and that there is nothing anyone can do about it,” he said. ‘‘The question for people is whether they really want to sell in the current market. If they do, then they have to have realistic expectations about what their property will make.”
O’Hara believes that the number of second-hand properties coming to the market in Dublin this spring will be significantly down on last year, with only vendors who really want or need to sell putting their homes up for sale.
‘‘From the market’s point of view, that is no bad thing, because it should make it easier to sell the properties that do come on,” O’Hara said. He also said the number of auctions taking place in the capital this year was likely to be minimal.
While O’Hara and many other agents believe that prices have now bottomed out, others are not convinced. Jim Power, economist with Friends First, does not see much cause for optimism.
‘‘The second half of last year was a very difficult period for the market and so far I haven’t seen any signs of a recovery,” he said. ‘‘The stamp duty changes announced in the budget in December were helpful and a step in the right direction, but they’re certainly not going to set the market alight.
‘‘During the first half of this year, we are going to continue to see a very strong level of buyer resistance; there is also still a huge amount of property on the market, so the dynamics are not good.”
Nor does Power believe that the market will stage a significant recovery during the second half of the year, although he does feel that it may begin to stabilise at that point.
‘‘I think that the European Central Bank will be forced to cut interest rates by the end of the year,” Power said. ‘‘The US is in serious trouble, and eurozone growth is slowing, so I would be surprised if we didn’t see two quarter per cent rate cuts by year end. While that won’t have a major impact on the property market, it will be helpful.
‘‘From September on, the supply dynamic should also start to have an impact. The supply of new homes will be down and, in the second-hand market, only people who really have to sell will be doing so.”
Not withstanding this, Power still believes prices will drop by about 10 per cent during 2008.Estate agent Hooke & MacDonald, which specialises in new homes sales, predicts a significant fall in the supply of new homes nationally during 2008 to around 50,000 units.
‘‘In Dublin, we believe that there will be between 10,000 and 11,000 new units coming onto the market, down from over 19,000 in 2006 and 17,000 last year,” said Geoff Tucker, the firm’s economist.
Tucker expects buyer confidence to increase gradually throughout this year and believes that first-time buyers will be among the first groups to come back to the market.
‘‘Rents have been rising significantly, and there will be a gradual realisation among first-time buyers that in many cases they would be better off buying than continuing to rent,” he said. ‘‘We’re not expecting the market to suddenly snap back to how it was in 2006, but we do believe that confidence will start to return.”
Tucker added that the drop in supply of new properties this year could begin to affect the market during 2009 and 2010.
‘‘We’ve seen from experience that it’s always easier to turn off supply than it is to turn it back on,” he said. ‘‘We could see a gap emerging once more between supply and demand over the next two years.”
