Property prices in Ireland are most expensive in Dublin city (€357,500) and least expensive in Longford (€55,000). This is according to a snapshot of Ireland’s property sector – as taken in December 2015 thanks to the average house index compiled by Real Estate Alliance, which looked at the price of three-bedroom semi-detached houses. The Real Estate Alliance is a 50 member-strong company network with estate agencies in every county.

The second-most expensive place to buy a house is south Co Dublin at €340,000, followed by Cork city (€285,000), Galway city (€250,000) and north Co Dublin (€247,500). Not surprisingly, counties beside Dublin were next on the list (Kildare, Wicklow and Meath in that order), while next was Mayo, where the average price was €195,000, followed by Kerry, where the price was €177,000.

According to Real Estate Alliance, this is because Mayo and Kerry contain much-sought after properties in tourist towns such as Westport and Killarney, which command a higher price.

Dr Lorcan Sirr from the School of Surveying and Construction Management in DIT agrees and notes one size doesn’t fit all when it comes to property prices in rural Ireland.

“There are 15 rural Irelands,” he explains. “Athenry, for example, can be as expensive as living in Galway city (people move out a few miles to towns and villages outside of cities, and this pushes up the prices), whereas north Longford wouldn’t be expensive.”

Lorcan acknowledges that there’s a much better income-to-purchase-price rate in rural Ireland. “The type of house you get for your euro is much better down the country. House sizes in Dublin are coming down.”

Commuting

However, Lorcan is keen to stress that there’s a lot of things to think about when moving to rural Ireland.

“You get a house cheaper, but you could be commuting all day. It’s unfair on kids – dropping them off early and picking them up late. It’s not just all about the price of a house. In Dublin, you can spend a lot on a house, but you may be able to walk to work.”

Lorcan thinks commuter towns are the worst of all worlds. “You’re neither one thing or another. You’ve no rural beauty and you’ve no urban advantages. You’re still up at silly o’clock. You’re still spending a lot on diesel and it’s not even nice driving because you’re sitting in traffic.”

Lorcan also says that those who move down the country for a job should make sure those jobs are secure. “If you leave Dublin for a job in an agri company in Carlow, what happens if you lose that job? You might have to move back to Dublin for work, but you’re living in Carlow. People need to do their research.”

Healy Hynes of estate agency REA Hynes in Athlone has a particular insight into the property market in the Midlands. He says there isn’t a huge number of people commuting from Athlone because the town has a fairly strong indigenous employment base. He notes that most people buying in Athlone are already living there.

“Also, Athlone’s a bit further away from Dublin than towns in east Westmeath and northeast Offaly, such as Mullingar, Edenderry and Horseleap. They are within a 45-minute drive of Dublin. That peripheral Dublin commuter market has picked up more easily and those towns are seeing an uptake in terms of buyers.”

But what about the commute, particularly given the very heavy rush-hour traffic volumes on motorways connecting commuter Ireland to Dublin?

“It’s a trade-off,” says Healy. “You pay €400,000 in parts of Dublin. You get the equivalent house down the country for €150,000. It’s an extra half an hour to get to work – an hour each day. But the difference is a deposit of €80,000 for a three-bed house in Dublin compared to €15,000 for the same house down the country (deposit is 10% for properties under €220,000). It’s about your quality of life. You’ve more disposable income. You’re living in a smaller, tighter-knit community. Perhaps you’re closer to grandparents. It’s better for overall family life. It’s an extra hour on to your day but the cost of living is less in the longer term.”

Three property tiers

Real Estate Alliance says the property market has been operating in three tiers over the past two years – Dublin only (tier one), commuter counties and the larger cities Cork and Galway, (tier two) and the rest of the country (tier three). Each of these tiers has developed at a different pace over the last two years.

As in most recovery markets, the capital was the first to show growth in 2014, followed by the commuter areas, with 2015 being the year when rural towns outperformed the market. 2016 saw a rise of 9% in tier three, compared to -6% in Dublin and +5% in the commuter areas.

The county with the smallest increase in property value is Sligo, which saw housing rise by €10,000 in the past two years. This is due to a combination of lack of supply of suitable three-bed semis, little or no development in the pipeline and a local economy which has yet to feel the full effects of the economic recovery.

“The market is totally governed by the ability of people to raise finance and by the restrictions placed by the Central Bank on mortgage deposits [namely having to raise a deposit of 20% for houses worth more than €220,000],” according to Real Estate Alliance.

“Therefore, we are seeing housing stock in tier three, which is priced at under the cap of €220,000, appreciating at the moment by figures of up to 20% per quarter in given counties. However, this may be the first significant price movement in a county over the past two years.”

The lack of suitable supply is the biggest influence on the property market nationwide, according to REA chairman Michael O’Connor.

“What we have seen in the last three months are prices only increasing in areas that are offering people the accommodation they require,” he says.

“People may want to buy housing, but if suitable properties are not available, they will not buy. We are seeing a lack of supply of good-quality three-bed semi-detached houses across the country and a desperate need for new developments.”

The effects of the Central Bank’s restrictions of mortgage deposit lending has caused some estate agents in Dublin to predict another year of price falls in 2016. At the same time, agents have predicted that rent will rise by 7% to 10% in 2016, further excluding people from saving deposits to get on the housing ladder.

“Most people we’re meeting are currently in rented accommodation and looking at getting out and getting a place for themselves,” says Healy Hynes. “Outside of Dublin you can purchase properties well below construction cost. People can now actually buy a place and the mortgage will be less than paying rent. They have a house, and have it for themselves and it is less than rent.”

Overall there’s a shortage of decent young family accommodation.

According to Real Estate Alliance: “The structure of the Central Bank rules means that second-time buyers are now finding it virtually impossible to make the move upwards to more suitable housing as their families grow.”

This has had the effect of cutting off the supply of suitable housing to first-time buyers, who are either being forced to look elsewhere for a very limited supply or abandon their search. The fact that loan offers are only lasting three months is also proving to be very frustrating to buyers in an era of low supply.

Dr Lorcan Sirr notes: “This is made more difficult by the short-term nature of contracts in jobs. It’s very hard to go into the bank if you don’t have a permanent job. It makes it very difficult to get a mortgage.”

The fact that builders cannot yet sell at a profit is the cause of this nationwide lack of suitable housing supply; the average prices of a three-bed semi in Real Estate Alliance’s Q4 survey was €188,370, while a builder needs to achieve €200,000 from the sale of a new home to cover the cost of construction.

Generation 20% discussion

Speakers will be taking to the main stage to discuss a range of topics at the Agri Careers Fair and one of them is “Generation 20%” which will look at the issues raised in this article. The talk takes place at 1.30pm

If you are interested in a career in the agri-industry, come along to the Irish Farmers Journal and open eir Agri Careers Fair, which takes place in the RDS on 3 March 2016. For more information, click here.