Savills

The Savills Blog

Q&A with James Butler, Head of Country Houses, Farms and Estates

How is the country homes market in Ireland performing in 2019?

The market for country houses remains active and while it is price sensitive, any contraction in demand has been offset by a lack of supply, with average prices remaining stable. 

We have recently launched a number of prime country houses, situated throughout the country, and are encouraged by the initial response. 

Who is buying?

International buyers in the prime country house market typically represent about one third of buyers (this proportion is higher in the market for estates). We are seeing an increase in the number of ex-pats returning to Ireland, principally due to the prosperous economy and job opportunities. 

For international buyers, those based in the UK and Europe are most active in the core country house and second-home market, while in the prime sector, buyers from USA, Asia and the Middle-East are to the fore. 

The industries that buyers operate in are wide ranging but in the last year, we have noticed an increase in the number of UK-based buyers from the financial sector. 

As the economy in Ireland grows, we are seeing an increased number of buyers for second-homes/a base in Ireland. This is enhanced by the stability Ireland is offering as an EU country, particularly for UK-based buyers. 

A key feature of the country house market in the last year is the growing diversity and range of uses that purchasers have for a country house, especially when it offers extensive residential accommodation and/or outbuildings; including retreats, short-term holiday lets and running online businesses. The ability to generate income from a property is particularly important to buyers if the property requires capital investment for renovation and redecoration. 

Another key feature is that the proportion of cash buyers in the prime sector (80%) continues to be substantially higher when compared with the entire market (40%). The Central Bank’s mortgage measures are, therefore, less relevant in our market.

What type of properties are available, and is there demand?

Demand is greatest and the highest prices are being paid for houses which are fit for modern-day living standards and are without blemishes. 

A key change in the market in the last 24 months is the growing emphasis that the market is placing upon energy efficiency and modern-day comforts. Houses (whether period or new build) which are efficient to run and offer contemporary living (open plan reception rooms, en suite bathrooms, etc) will command a premium price, especially as they are in short supply. 

There is a greater proportion of country houses coming to the market which require capital investment and while the buyer pool is more limited, there is demand for houses requiring renovation and redecoration if the asking price reflects the additional cost required. Demand will increase for these properties if they offer the opportunity to generate an income and a buyer can create a facility specific to their needs. 

Any blemishes perceived by the marketplace also must be reflected in the asking price to generate competitive interest. Examples include the close proximity of a neighbour or road, shared access or poor-quality broadband. 

Water frontage/direct access to a beach can add between 25% and 50% to the value of a house and almost always attracts competitive interest. 

Properties situated within commuting distance of Dublin continue to attract more buyers, but we are also seeing a growing number of buyers prepared to purchase outside the commuting zone as they can work from home if the property offers broadband. 

€400,000 to €1,000,000 is the most active sector, principally as there is a larger proportion of buyers with a budget in this range than properties in a higher price bracket. In addition, in the prime sector (above €1,000,000), buyers seek perfection before they pay a premium price and they are prepared to wait to find it. 

With inconsistent trends in the Irish property markets over the last decade, buyers are nervous about over-paying, resulting in few pre-emptive premium bids being received and perhaps, bizarrely, buyers are often comfortable bidding in competition as it gives them the peace of mind that they are paying market value.  This is particularly the case for the estate market due to the substantial correction experienced since the height of the market, however, buyers now perceive the Irish estate market to represent good value.

The rapid growth of average residential prices in Dublin in recent years has been making the headlines, causing some country house sellers to believe that the value of their property has also experienced double-digit growth.  While this has not been the case, country house sellers are likely to benefit in the forthcoming months from a more stable market, compared with the city residential market which has a declining growth rate.

Has Brexit had any affect on supply or demand?

Brexit is the key topic of discussion at present and as with any form of uncertainty, it is causing buyers and sellers (especially those based in Ireland), to sit on their hands.  Supply and demand have decreased, meaning that prices have seen little variation.  The number of enquiries received by UK-based buyers has increased and is largely Brexit-driven but exchange rate is preventing the proportion from being higher.  The rise in UK-based buyers with no Irish heritage has been particularly noticeable.

Having worked through the Scottish Independence Referendum (which saw the number of estates transacted more than double in the year after the vote compared with the year leading up to the vote), I anticipate the volume of prime properties coming to the market to increase once Brexit has been resolved, meaning sellers are likely to be faced with greater competition and while buyers will have greater choice, they too will see more competition.  It is likely that the future performance of the macro-economy in Ireland will have a greater influence on average prices in the country property market than the sole impact of Brexit.

 

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