An Economic and Spatial Plan for Limerick Appendices

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Limerick 2030 An Economic and Spatial Plan for Limerick Residential The Irish Housing Market is characterised by a strong owner-occupied sector with a predisposition towards family homes (semi-detached and detached). This led to a strong and exponentially increasing demand for such properties throughout the “boom years”. Prices in all areas rose rapidly and as apartment type developments came on stream, these were purchased by individuals hoping to get on the property ladder. Since 2007 prices for all types of housing have fallen, with apartment developments being hit hardest. In general, residential prices have fallen some 54% and continue to fall, with the National Property Index down 15.27% year on year in May 2012. The average quarterly fall in prices is in the region of 4.3%. Figure 4: House Price Index Source: ESRI, 2012 According to the latest report by daft.ie, price disparities between small and large properties have increased, as there is a latent demand for larger family type homes. This is supported by research from the Economic & Social Research Institute (ESRI), which states in its latest Quarterly Economic Commentary that in key urban areas, the stock of vacant houses is not very large. This is particularly the case for houses in the greater Dublin area. A significant increase in demand to buy houses in these urban locations could exhaust the vacant stock and, given a very low level of house-building, this would begin to put upward pressure on prices. 23 The Census of 2011 showed a continued increase in population, which may point to a latent demand for housing, particularly larger family homes in good locations. Affordability is no longer a problem in absolute terms, but lending is still seen as a barrier to entry into the owner-occupied 23 ESRI Quarterly Economic Commentary, Summer 2012 June 2013 58
Limerick 2030 An Economic and Spatial Plan for Limerick market. The average price for housing outside Dublin is in the region of €149,000 to €162,000, and does not show significant signs of strengthening at present. Prices are not expected to recover to 2007 levels in the short to medium term. While the Dublin market has started to recover, the same cannot be said for the rest of the country. Excess supply, unsuitable stock in the wrong locations and restrictions on lending mean that sales remain low. A decrease in the levels of immigration coupled with the introduction of a new property tax will keep sales low in the short term. The ESRI data also show an unusually high proportion of households who are renting today, probably as it is more profitable to rent than to buy in a market that was seen as over-valued and is still in a falling market. 24 There has not been a drop in rents over the period since 2007 that corresponds to the decrease in sale prices, with rents dropping by only 29.4% nationally. Yields have, however, increased from a low of 3.5% in 2007, to 5.5% in 2012 (in all markets). 25 The rental market continues to perform well in light of the current conditions for purchasers. Retail There are two aspects to the Retail Market, occupiers and purchasers/investors. Decreasing sales volumes and rising unemployment has impacted on demand for retail space. Prime yields are still at a 10-year high, at 6.45% in the prime Dublin market (compared to 7.85% in Limerick), from the 10-year low of 2.85% (4.0% in Limerick). 26 Prime rents are down across the board, €5,400 on Grafton St. in Dublin, down 3.6%. Limerick has performed most poorly of all the major cities in this regard. There has been increased interest from international retailers in the Irish market, who have been attracted by favourable rents and improved lease agreements (including substantial rent free periods and short break clause horizons). While rental levels are down, they are still strong when backed by an international retailer. Investors are wary, however, of many of the factors that are enticing the international retailers. The expected abolition of the upward only rent reviews and the favourable terms that can be negotiated by tenants has meant that only the prime retail locations are being seriously considered. Uptake outside of these areas, therefore, is still poor. Developers are slow to react to latent demand due to problems with obtaining credit. Lending institutions are only lending where there is a significant deposit (anecdotally in excess of 40%) and a secured long-lease tenant. 24 ESRI Quarterly Economic Commentary, Summer 2012 25 Taking Stock of Ireland's Property Market, Five Years into the Crash", Ronan Lyons, Commentary on Daft.ie Report July 2012 26 Chushmann & Wakefield, “Marketbeat: Ireland Retail Snapshot” Q1 2011 June 2013 59
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CONTENTS Appendix 1: Baseline Analy
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Appendix 1 Baseline Analysis
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Appendix 2 Limerick Marketing Plan
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An Economic and Spatial Plan for Limerick Appendices

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