Market Update and Adjusting to the ‘New Normal’June 3, 2020
We’re all doing our best to adjust to the ‘new normal’. Here we give some thoughts on the outlook for the property market in West Cork while highlighting how we are adapting to this new environment.
Property prices in West Cork are likely to stay relatively stable in the short term with difficult months ahead for purchasers due to an unprecedented drop in supply. MyHome.ie are predicting that property sales in Ireland could fall by up to 50% this year and these figures are evident in the West Cork market:
- Supply of property has plummeted in West Cork. When comparing figures from June 2020 to July 2019, the supply of property advertised for sale with a Bantry address has dropped form 88 to 44, Skibbereen has dropped from 98 to 50 while Clonakilty (already suffering from a shortage in supply) has further contracted from 61 to 55.
- On the demand side, the true extent of the impact is unclear. While supply has contracted by approximately 50% in Skibbereen and Bantry, we do not expect that demand has dropped to that extent. Banks are still lending and allowances are being made for purchasers who find themselves on one of the COVID schemes. In a normal scenario, with supply outstripping demand, we would expect to see prices increase, however, lending limits set by the Central Bank of 3.5 times salary, has stabilised prices.
The above is a short term view. It is impossible to predict the long term ramifications of the virus and the impact of a global downturn on the Irish Economy. There is a tendency in Ireland, as a result of the last crisis, to link property prices to a recession. This is largely a recency bias given the last recession was as a result of a credit bubble.
The dynamics of the rural market is also very different to the cities. There is a strong pipeline of new builds to come on stream in Dublin and Cork which will supplement the second hand housing market. The cities are unlikely to feel the same supply side impact as is being felt in West Cork which implies that the drop in demand there may have an impact on prices.
For anyone thinking of selling, our long term outlook has not changed. Prices are likely to stay relatively stable over the next 12 to 18 months. The central bank rules limiting the majority of borrowers to 3.5 times salary along with loan-to-value restrictions have brought stability to the market. Anecdotally, we are having a significant number of calls from people based in Dublin and abroad who are looking to base themselves in West Cork. With 1 Gigabit broadband now available in Bantry, Clonakilty, Dunmanway and Skibbereen, the area will continue to be an attractive place to live.
Our offices will reopen from 8th June. The 20km restriction in place from this date is for exercise only. Our understanding is that individuals will be allowed to travel greater than 20km to view a property from this date. Viewings will be by private appointment only with parties viewing asked to sanitise their hands before entry and to limit touching any surfaces. Individual vendors may have specific requirements for any parties looking to view their home which will have to be adhered to. The 2 metre social distancing rules must be adhered to at all times.