Source: By Christian McCashin
It was always liable to happen… After an extended period of substantial gains for property investors, experts are warning that ‘unrealistic’ price expectations from house sellers are now starting to block sales.
According to the Society of Chartered Surveyors’ annual property review homes are taking just over five months to close, with some sellers believing their house is worth far more than what buyers are willing to pay.
According to Daft.ie’s figures for Dublin last year, asking prices increased by 2.9%. More than two-thirds – 67% -of estate agents reported an increase in sellers’ price expectations.
But the chartered surveyors’ professional body warns that there may be a drop in prices at the top end of the market, especially in Dublin. Publishing the report, SCS Ireland boss Áine Myler warned about ‘excessive’ expectations. ‘Whilst we predict continued house price growth on average this year, there will be winners and losers. It’s likely that the property market may correct for some high value properties in Dublin in particular.
Potentially unrealistic asking prices can leave all parties disappointed, curtailing market movement when it’s needed most’ she said. ‘The challenge for estate agents is managing some vendors’ excessive price expectations.’
She also warned about a price ‘correction’ – where overvalued properties suddenly drop in price – at the top end of the market. ‘For the market to operate efficiently, we need a regular turnover of sales to help purchasers and sellers to keep moving up and down the ladder’ she added.
The Central Bank’s mortgage lending rules restrict the amount people can borrow in most cases by fixing it to 3.5 times a person’s salary and to 80% of the house price. The measures have seen a sharp slowdown in house price inflation.
Despite the price warning, estate agents across the country believe demand will increase across all property types, with national house prices forecast to rise 4% this year.
Owners of one and two-bed apartments are likely to see the highest price growth, with estate agents predicting one-bed apartments will increase 6%. according to the SCSI’S review.
With the greater Dublin area, Dublin city is expected to show the greatest demand.
Overall Dublin prices are expected to increase by 5% this year, the SCSI report expects.
Switching to better deals
The number of homeowners looking to switch to a better mortgage deal soared over 71% in the last year, figures show.
The latest Banking and Payment Federation figures from December show in the final three months of 2018 there were 1,684 re-mortgage/switching loans, reflecting year-on-year growth of 71%.
Joey Sheahan, of MyMortgages.ie, said: ‘The numbers stack up – switching could save an average mortgage holder anywhere in the region of €275 monthly, or $3,300 annually. We need to do more to broadcast to every mortgage-holder in the country that they could be in line for savings, and to explain to them that the process need not be arduous, complicated or intimidating as they might expect.’
Mr Sheahan said the number of people switching mortgages had ‘ramped up’ and added: ‘There is still more to go in terms of the volume of mortgage holders who should be switching for savings.’
MyMortgages Limited trading as MyMortgages.ie is regulated by the Central Bank of Ireland.