Welcome to the February 2007 Private seller newsletter
Steady house prices
National house price growth for 2006 was slightly higher than anticipated at 11.8% compared to a house price inflation rate of 9.3% in 2005.
However, according to the report ptsb/esri House Price Index report, the rate of growth halved in the second half of 2006. This could be largely attributed to the interest rate..
National house price growth for 2006 was slightly higher than anticipated at 11.8% compared to a house price inflation rate of 9.3% in 2005.
However, according to the report ptsb/esri House Price Index report, the rate of growth halved in the second half of 2006.
This could be largely attributed to the interest rate rises imposed by the European Central Bank and anticipated changes to the stamp duty rates in late 2006, which never materialised.
Continued strong economic indicators, rising disposable income & higher immigration levels will all contribute to the continued strength and steadiness of the housing market. One of the key factors here could be the receipt of SSIA payments that will provide a higher disposable income for many.
The permanent tsb/ESRI House Price Index report predicts a house price inflation rate of between 3% and 6% for 2007.
The fastest growth rate in 2006 was found to be in County Leitrim where prices grew by a massive 29% throughout the year. This is compared with 15.9% in Dublin and just 6% in Sligo.
The average price for a first-time buyer nationally is now almost €280,000.
The average price table below, which applies to the final quarter of 2006.
Average Price Location & Type
€353,815 Dublin - First-time Buyer
€451,507 Dublin - Second-time Buyer
€383,661 Dublin - New Home
€434,555 Dublin - Existing Home
€257,169 Rural - First-time Buyer
€312,997 Rural - Second-time Buyer
€251,175 Rural New
€270,702 Rural Existing
Estate agent fees to soar
According to the Institute of Professional Auctioneers and Valuers, [IPAV], which represents more than 8000 agents, the levelling off in the property market will drive up commission rates. Consumer’s Association of Ireland chief executive, Dermot Jewell, described the reasons for the increase as ‘utterly ridiculous’. He said ‘the reality is that when you look at the amount of work involved, it’s just not value for money because they are getting a percentage of such a massive price’.
The head of the IPAV, Fintan McNamara, warned that commission levels could rise by as much as 33% in 2007, as the tougher property market forces estate agents to work harder. ‘During the course of the boom it was very very easy to sell properties – agents were often just facilitators in the process. Now agents are going to have to use their marketing skills and there will be a lot more work involved’.
National commission rates now average about 1.5% with fees in Dublin closer to 1%. ‘Nationally we could be looking at 2 % by this time next year he added. An average second hand house selling for just under €350,000 gives an average commission rate of €5,250. If commission rates rise to 2% the average fee will stand at €7,000 leaving the seller €1,750 less well off.
Loan to value mortgages
A Loan to Value, LTV, is a type of mortgage where the interest paid reduces ass the ratio between the remaining mortgage and the value of the property widens. AIB is the first domestic bank to cut interest rates on mortgages for homeowners who have equity in their property.
This comes in response to competition from NIB who reduced its tracker mortgage rate by .36% for mortgage holders owing less than 50% of the property value. It is available only to those who have equity in their homes already. The Irish Mortgage Corporation believes that other banks will soon follow suit.
Affordable houses remortgaged in Fingal
The Affordable Housing Scheme designed to assist low-income families buy a house, was launched nation-wide in 2003. Minister of State at the Department of the Environment, Noel Ahern, recently announced plans for 40,000 affordable homes over the next seven years.
Under the scheme, an individual earning up to 40,000 Euro or a couple with a combined income of 100,000 Euro can apply for an affordable house. The house is sold at a discount of between 20% and 30% of the market rate. The council then lends the applicant 97% of the discounted price.
If the property is sold within 10 years, the council is entitled to claim back the discount on the sale price. This reduces by 10% every year over ten years, and there is no clawback at all after 20 years.
A year after buying property from the council in Fingal, six purchasers sold or remortgaged. In 2005, 60 householders opted out of the scheme. Since it was launched, a total of 124 people, or one in eight who availed of the scheme have quit. 40 have remortgaged with a commercial lender, maximising the potential gain.
Once the council has been paid their claw-back, the householder then benefits from any increase in the value of the house. House prices have risen on average 15% a year over the last 10 years.
Energy performance of buildings directive
Almost half of all the energy consumed in Europe is used in buildings for the basic requirements of light, heat and power. The housing sector is the single largest consumer of energy in this country, accounting for almost 30% of energy use and CO2 emissions. Over 90% of our energy requirements are imported, and we are also heavily dependent on fossil fuels. But supplies of fossil fuels like oil and coal will not last forever. We must think of alternative ways to meet our energy requirements.
The construction and property industries in Ireland are facing a new challenge in the EU Directive on the Energy Performance of Buildings, which was made law in January 2006. Sustainable Energy Ireland (SEI) is the agency charged with informing the public about the new directive.
The law requires that energy labels are granted and made available to prospective owners or tenants for virtually every type of building and it is anticipated to become a key factor influencing the value, and thus the saleability of property in Ireland.
The directive will apply to almost all buildings, residential and non-residential, both new and existing. Certain categories of buildings, such as buildings of historical or architectural importance, religious buildings, and buildings of low occupancy or size will be exempt.
In Ireland over 800,000 houses were built before the introduction of the Building Regulations in 1980. The energy consumption in these buildings varies greatly from 200 to 800 kWh / m 2 / year. Houses built today that comply with the building regulations will consume less than 90 kWh / m 2 / year.
Not only must we build energy efficient houses, we must also improve the energy efficiency of older houses.
The energy efficiency labelling system will be similar to the one used for electrical goods. You can buy an A or B rated washing machine for example, with the A rated machine using less energy, less water etc.
Buildings in the commercial and public sector over 1,000 m square must carry an energy label, whether they are on the market or not and all public buildings must display the energy label in a prominent position for members of the public to see.
The labels will be valid for a maximum of 10 years but a new label must be issued if the building has been subjected to any major renovations.
The EPBD labels must also come with advice on how to make a building more energy efficient. Essentially it will be a ‘user manual’ for every building.
It will lead to the more efficient use of energy. In simple terms, the buildings will be easier to heat and cheaper to run. So even tenants will benefit Soon the buyer or building occupant will know from an energy audit, what the going energy costs and environmental emissions associated with their building are.
An energy audit will identify where building is using energy and what efficient measures could be implemented to reduce consumption.
This new directive will bring changes in the property market, as well as on the building industry, architects, engineers, developers, purchasers, and owners. Purchasers and leaseholders will be able to clearly establish the energy efficiency of the building they are interested in.
The biggest impact expected in the medium term, say 5 years, is regarding the marketability of properties with poor ratings – they may not be marketable at all. It is possible that the market value will disappear from buildings that don’t have good energy performance. Simply put, A building that doesn’t have a good certificate won’t be popular. We will probably see a situation where a property must have an audit before its put on the market.
Financial institutes in particular will be very interested in the energy ratings of property before they invest. In Ireland they own 80% of the commercial property!
Is it possible that we may see a large quantity of building stock becoming undesirable, and more derelict buildings in town centres if it is more profitable to buy a modern energy efficient building rather than bring older buildings up to new regulation standards?
The audits are to be carried out on a 10-year basis for all buildings, AND A Certificate is valid for 10 years. Ten years is a long time in the world we live in, given that the oil industry itself talks about known oil reserves lasting another 30 – 50 years. With China, India and the 10 new EU states all developing and using more energy the increase in demand is likely to increase the cost of fossil fuels.
We know we have a limited resource and we know we have global warming so we should become more efficient as quickly as possible.
Relevant Standards
Building Regulations, 2002
Part L: Conservation of Fuel and Energy
Part F: Ventilation
Part J: Heat Producing Appliances
ISEN 832 - Thermal performance of buildings - calculation of energy use for building
-Residential buildings CEN 1998.
Useful Contacts for Further Information Energy Efficiency Measures
• Solar Technologies
Energy Research Group, UCD School of Architecture Tel: +353.1-269 2750 erg@erg.ucd.ie
Irish Solar Energy Association, Dublin2.Tel: 087 2341351 chairman@irishsolarenergy.com
SEI, Renewable Energy Information Office, Co. Cork. www.sei.ie
• Radon
Radiological Protection Institute of Ireland, [RPII] Dublin. Tel: +353 1 269 77 66 rpii@rpii.ie
ENFO, Public Environmental and Sustainable Development Information Service Dublin. Tel + 353 1 888 2001 or 1890 200 191 (calls at local rate). info@enfo.ie
• Insulation
Insulating Contractors Association, Construction Industry Federation, Dublin Tel +353.1 – 406 6000 ihbe@cif.ie
• Building Products Standards
National Standards Authority of Ireland, Dublin Tel: +353 1 807 3800 nsai@nsai.ie
Irish Agrément Board, Dublin. Tel +353 1 8073800 agrement@nsai.ie
DIY Home Energy Survey
The home is one of the largest users of energy in Ireland. It accounts for almost one third of the energy used in the country. Although energy is vital in our everyday lives, there are ways we can reduce the amount we use. You can do your own "Home Energy Survey". Walk through your house, room-by-room, identifying home improvement projects that will deliver the greatest energy savings and reduce your bills most effectively.
Often there will be more than one recommendation, so compare the "pay-back period" of each option. In other words how long it takes to recoup your initial outlay. First it makes sense to complete the projects that quickly pay for themselves. But remember that other projects, which pay for themselves more slowly, might have non-monetary advantages such as increased comfort, security, and noise reduction.
The most rewarding way to conduct the Home Energy Survey is to examine each area of your home. The exact payback period for particular projects will vary depending on the age, type and style of your house, so we have provided indicative cost (€) and payback ratings (*).
There are zero-cost, low-cost, medium cost and long-term measures that you can try.
Energy Saving Measures by Cost
To summarise the various costs involved in making your home more energy efficient, we have divided the numerous opportunities under four headings. Whatever your budget there are energy saving measures you can undertake.
Zero- cost Energy Saving Measures
• Turn down thermostats
• Use timers for hot water or space heating
• Switch off lights/appliances when not in use
• Shower rather than bathe
• Close curtains at night
• Fix leaking taps
• Position fridges and freezers in a cool place away from direct sunlight and heat
• Always wash full loads in your
Low-cost Energy Saving Measures (up to €150)
These measures typically recoup their cost in 1-2 years
• Insulate your hot water cylinder
• Draught seal doors, windows and other gaps
• Improve heating and water controls
• Replace ordinary light bulbs with energy saving CFLs
• Use lined curtains
Medium-cost Energy Saving Measures (€150-€450)
These measures typically recoup their cost in 3-4 years
• Insulate your attic
• Consider ground floor insulation options
• Central heating controls
• Buy energy efficient appliances
Long-term Energy Saving Measures (>€450)
These measures are ideally considered when doing renovation/replacement work
• Cavity wall insulation
• Internal wall insulation
• External wall insulation
• Low-emissivity double-glazing
• Solar water heating systems
For more information www.powerofone.ie
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