An Economic and Spatial Plan for Limerick Appendices

Limerick 2030 An Economic and Spatial Plan for Limerick
4. Property Market Analysis
General Market Conditions
The Irish Property Market has undergone one of the largest adjustments in its history, indeed an
adjustment that is notable on an international scale in its severity and duration. 20 A perfect storm of
readily available credit that drove both demand and supply, coupled with a rapidly expanding
domestic economy, meant that property prices in all sectors accelerated from the early 1990s until
around the second quarter of 2007. The market subsequently crashed as it became clear that
supply was significantly exceeding demand and the decrease in the availability of credit hit both
developers and occupiers, affecting prices negatively.
There are issues, however, with examining the current state of the Irish Property Market, owing to the
lack of a central database of property transactions. Research is disparate and varies in its accuracy,
with asking prices often differing from transaction value. Supply is often difficult to quantify as the
National Asset Management Agency (NAMA) has had an impact on how and when property is
brought to the market, with vendors in some sectors withholding properties until NAMA has released
its “stock” in that sector, (e.g. hotel properties).
With GDP and consumer spending still falling, the market is still cautious about investing in property in
Ireland, particularly outside of Dublin (indeed, it has been said that the Irish market is extremely
disparate and discussions of a Single Market are somewhat futile 21 ). However there are signs that
there are some small shoots of recovery. Increased lending and the emergence of cash buyers has
seen some activity, particularly in the prime areas in Dublin. Lending rates are still low compared to
other markets (new lending in the UK, for instance is at 3.9% of housing stock compared to just 0.8% in
Ireland 22 ). Cash investors are emerging as key players in the market, although anecdotal evidence
suggests that smaller investors are being discouraged from investing in the residential market due to
the introduction of a comprehensive property tax from July 2013.
What follows is a brief overview of market conditions by sector in Ireland as a whole, in order to
provide some context for the Limerick market. The Limerick market can then be examined in detail
using what data sets are available. A series of telephone interviews were conducted with local
property agents in order to gauge market sentiment and to obtain more accurate figures on prices.
Prices may vary due to the non-transparent nature of most transactions.
20.Daft.ie 2nd July 2012 reported that the average OECD crash lasts 4.5 years and results in a price drop of 23%; in Ireland the
crash has lasted in excess of 5 years and has resulted in a price drop of up to 53%
21 Mary Finnegan “The Irish Property Market – Where do we go from here?” 02/05/2012
22 Ibid
June 2013 57