Chronic shortage of houses pushes up prices

A chronic shortage of supply continues to be one of the biggest issues facing the residential property market in Galway, according to local auctioneers.

One agent said sales volumes have returned to the height of the property boom in 2007.

And increasing demand is continuing to drive up prices by as much as 75% – albeit from a low base – since the bottom of the market in some towns.

While in the city, 20 new homes on the western side of the city sold within hours of being launched.

Official Government statistics show that sales across Galway were up 21% this year (2,370 homes), while the total value of sales was up 30% – more than €400 million.

South Galway auctioneer Colm Farrell said shortage of supply continues to be the main problem with the market in the county.

“2015 was a good year, we sold a good bit of stuff, but now we’re at the point where we’re out of stock. There are only one or two houses left [for sale] in Gort itself and no new houses in the pipeline.

“There will be a couple of secondhand properties and a couple of bank repossessions coming up, but nowhere near enough to meet demand,” said Mr Farrell.

He said three-bed semis around Gort have gone from around €65,000 at the bottom of the market to around €110,000 to €115,000 (up 75%) at the moment, while four-bed semis have gone from €85,000 to €135,000 (almost 60%).

Ballinasloe and city-based estate agent John Dolan said his sales volumes had returned to levels similar to 2007.

“Prices in Ballinasloe would be up around 15% to 20%, but that’s from a very low base. Sales volumes are back at 2007, but the prices are obviously much lower.

“Anything up to about €100,000 will attract plenty of buyers, but there’s a lack of supply at the moment.

“A three-bed semi (in Ballinasloe) would have cost between €65,000 and €90,000 – they’re now selling for €80,000 to €110,000. Four-bed semis were €80,000 to €100,000 – they’re now selling for €100,000 to €120,000,” said Mr Dolan.

He said most properties now sell within four to six weeks of going on the market, while five years ago, they would have taken around six months to sell.

“Supply is the biggest problem for 2016. Builders need to be able to make a profit, and they just can’t do that at the moment. There are no schemes in Ballinasloe, while there are a few being finished in Loughrea. There will be some increases in prices in 2016, but not as dramatic as this year. It the basic economics of supply,” said Mr Dolan.

North Galway auctioneer Gerry Coffey agreed there is a shortage of stock available.

“We can see an improvement in the economy, property prices have bottomed out and we now have a shortage of good quality rural properties at realistic prices.

“You can buy a house now for substantially less than it would cost to build, in fact, we have a shortage of stock of houses on our books at present.”

He said that first-time buyers returned to the market in great numbers in 2015, and UK buyers were also in evidence.

Colm Farrell said he is seeing an increasing level of young buyers with mortgage approval, but believes this is down to people getting back to work, rather than banks ‘loosening’ lending criteria.

“More people are out looking for property and have mortgage approval up to €130,000 to €140,000, anything above that and young couples would be struggling.

“There are loads of buyers with mortgage approval, there’s more employment, but bank lending criteria is the same,” he said.

Mr Farrell added that with the shortage of stock for sale, any “nice property” that comes up for sale will usually have two or three bidders.

“Prices have definitely risen and the market is performing very strongly at the moment. My advice to buyers is tread carefully, and don’t overpay for property. Nobody knows that can happen down the line,” he said.

Meanwhile, in the city, Niall Browne of O’Donnellan & Joyce Auctioneers said that with only one new development coming on stream, prices are rising.

Maoilín, a development in Knocknacarra saw its first phase of 13 homes sell out in a week. When Phase 2 (20 homes) was launched, it sold in just hours.

“There were 242 people registered on the list for those homes, Phase 3 will be launched soon,” he said.