Property, to Buy or Not to Buy Townhouse in the City – A Good Investment?

Waterford’s property market is at a very precarious point.  Our house prices are rising faster than anywhere else in the country, up 14.5 % on last year, although arguably coming from a very low base.  The average price of a home in the city currently stands at €158,861 and €193,724 in the county. According to daft.ie house prices are rising by €2,000 a month nationally.

The most obvious factor in this rapid increase in price is a severe lack of supply.  Only a handful of new developments are available in the city and county with the average price of a new three bedroomed property being approx. €200,000 (Waterford City).  This price tag is persuading many first time buyers to opt for second hand properties as it is working out less expensive even taking into account the 5% from the help to buy (HTB) scheme.

These first time buyers are competing for properties against investors who are also opting for the less expensive second hand market, particularly in city centre locations which were traditionally purchased by owner occupiers, thus pushing prices up even further.  The reason these properties are so appealing can be outlined by means of a simple example.  Take an investor who purchases a property for e.g €150,000, this property if let for say €800 p.m. could see him earn a yield of over 6% (less expenses) on his investment, now what bank is offering that at the moment!

The lack of available rental properties has pushed the rental market to new heights, with one letting agent recently lamenting that he has no properties whatsoever available in the city, having just let a two bedroomed town house for €850 per month.

I myself recently agreed the sale of such a two bedroomed townhouse and had 6 disappointed under bidders on the property, a mixture of investors and owner-occupiers.

Other factors effecting the market include the high cost of construction and the Central Bank relaxation of the lending rules for first-time buyers.

So in conclusion house prices would seem to be going nowhere but up for now and for the foreseeable future.

Petrina Walsh SCSI is an Auctioneer with Purcell Properties, 51 High St Waterford.

 

Waterford’s property market is at a very precarious point.  Our house prices are rising faster than anywhere else in the country, up 14.5 % on last year, although arguably coming from a very low base.  The average price of a home in the city currently stands at €158,861 and €193,724 in the county. According to daft.ie house prices are rising by €2,000 a month nationally.

The most obvious factor in this rapid increase in price is a severe lack of supply.  Only a handful of new developments are available in the city and county with the average price of a new three bedroomed property being approx. €200,000 (Waterford City).  This price tag is persuading many first time buyers to opt for second hand properties as it is working out less expensive even taking into account the 5% from the help to buy (HTB) scheme.

These first time buyers are competing for properties against investors who are also opting for the less expensive second hand market, particularly in city centre locations which were traditionally purchased by owner occupiers, thus pushing prices up even further.  The reason these properties are so appealing can be outlined by means of a simple example.  Take an investor who purchases a property for e.g €150,000, this property if let for say €800 p.m. could see him earn a yield of over 6% (less expenses) on his investment, now what bank is offering that at the moment!

The lack of available rental properties has pushed the rental market to new heights, with one letting agent recently lamenting that he has no properties whatsoever available in the city, having just let a two bedroomed town house for €850 per month.

I myself recently agreed the sale of such a two bedroomed townhouse and had 6 disappointed under bidders on the property, a mixture of investors and owner-occupiers.

Other factors effecting the market include the high cost of construction and the Central Bank relaxation of the lending rules for first-time buyers.

So in conclusion house prices would seem to be going nowhere but up for now and for the foreseeable future.

Petrina Walsh SCSI is an Auctioneer with Purcell Properties, 51 High St Waterford.