Is there value left anywhere in buying a new home?

Prices are outrageous in Dublin and availability is a problem throughout the country, although it is worse in some counties than others. Yet there remain a few pockets that might still be worth a punt.

Preamble: Why I care about the price of new homes in Ireland

  • So we are in the morket for a new gaff now. The landlord came round on Sunday to say that he is thinking of flogging our apartment, and if he’s thinking about it, then he is clearly doing it. When we moved in a year ago, he told us we didn’t have to worry about eviction cos he was keeping the gaff for when his kids are in college, next basically decade. This was important to us because we had just been evicted from our last gaff in Kilmainham, and now we were suddenly paying the same rent (€1950) for a much shittier place, all the way out in Blanchardstown, where we knew no one. Like a micro-emigration to a featureless place where no one wants to visit you. 
  • The landlord was motivated by an unexpected dip in the rent we were paying him. A few months ago the old tenants came round to pick up their post and I asked them how much they had been paying. €1500 per month. According to the rent pressure zone laws, applicable throughout Dublin, the rent should only be about €1650 now, yet the landlord had sneakily jacked it up to €1950, knowing that some sucker would bite. But once we worked out the sitch, I called him up and he didn’t contest (much) so for the last two months we’ve only been paying €1650. When he came over the other day, we expected a contest. Instead, he went nuclear and told us that renting it out wouldn’t be worth his while any more. My ball my game. But lookit, I understand where he’s coming from. The system is skewed now so that selling a gaff will get you full market price, whereas renting it out means your yield is lower, especially with the massive tax on rent profits.
  • The whole fiasco is a kick in the gulags but it’s also a kick up the Gordon. We have decided that we are never renting again and we are going to buy our own house this time, whatever it takes, and most likely the cost will take us out of Dzublin, where I’m from, where my family is, and where all our friends are.  But I’m sick to death of lodging 24k into someone else’s bank account every year and knowing that the net result isn’t just a lack of ownership and security. It’s that I’ll have to have to work yet another year before I can retire.
  • There’s just one catch. We will have to buy a new home because we don’t have a big enough deposit saved up to buy an old one, if we wanted to. This is because there are incentives for buying new homes. The help-to-buy scheme which will give us up to 30k taxback towards the deposit. And on top of that, there’s a very new scheme called First Homes where the government will pay for (and own) 20% of the total price of the property. So with a mortgage approval of 300k (hopefully), 30k help to buy towards the deposit, and 3.3k of our our own, we’d be able to buy 333.3k of a gaff in any county. And then if we choose to buy in Cork, Galway, Dublin, Wicklow, Kildare or Meath, then  the government will top up the difference, of up to 25% of what you can afford (i.e. 20% of the total). For us that makes 333.3 * 1.25 =417k. Of course you have to actually earn and pay back 417k over the years, which may be more than we’d like to, given that we only get one life each.  But it’s a lot better than renting our way into yet more renting when we are old. 
  • So I thought I might as well turn this crisis into an opportunity and start data-blogging about house prices in Ireland. I’ve spent a lot of time cleaning the data in the property price register and so this is just a demo test. 
  • The graphic above shows the number of new homes sold (y) against the median price (x). Both axes are on a log scale, so watch out. I got the data from the property price register and it’s based on residential properties that have already been sold in 2022. This is because property websites don’t list the price of new houses for sale online, it’s all just Price on Application (POA). That means, give us a buzz, tell us how much you can afford, and we’ll price the gaffs according to what people have told us they can fork out. It’s genius stuff from a money-squeezing point of view, and strikes me as something that needs to be outlawed. It also makes it astoundingly awkward to search for new houses online. For second-hand gaffs, you can hop on websites like daft.ie and customize your search. But for new homes, you gotta literally shop around, and wade your way through the morkeshing nonsense on the shiny websites associated with each housing development.
  • Unsurprisingly, Dublin has the most sales (1632) and the highest prices (405k median), followed by nearby Wicklow (416 sales @ 388k),  Kildare (757 sales @ 366k) and Meath (536 @ 300k), possibly because Meath only provides access to the Northside. Several provincial cities are selling for over 300k:  Cork(721 @ 308k), Limerick (170 @ 300k), Galway (147 @ 308k) and Kilkenny (just 48 sales @ 326k). The urban anomaly is Waterford, which seems to offer the best value for a city (188 sales @ 251k), although note the actual number of gaffs if pretty low. What you are looking for here, as prospective house buyer, is something in the top left of the graphic, where there are lots of houses for the lowest price.  This puts Kilkenny as the worst county, and Wexford as the best, although in reality that just means there are loads of new houses in Enniscorthy and none anywhere else. It’s not like the local council are constantly building  a few new houses throughout the county in order to keep up with local needs. So in order to find where the value is, we need to look at the distribution of prices within each county.
  • The violin plots in this graphic show the price variation within each county and any bumpiness is immediately clear.  The counties are lined up by ‘province’ (I’ve lumped the border counties in with Connacht to save space), and I’ve ordered the counties by their median sale price. Most counties have a fairly even distribution, although again this is on a log scale so the expensive houses (to the right) are bunched up. Note how Dublin (column 1, top) has a lot of very expensive houses but Cork doesn’t (column 3, top). I don’t know if this is because the most scenic parts of Cork are further from the city than in Dublin.  Dublin also has a notable long tail to the left where a handful of gaffs have sold for way less than 250k, maybe because they are windowless apartments, or a few lucky people are getting mates rates from the builders. This strikes me as something worth looking in time. I’ve actually deleted sales less than 100k, as there are always some dubious-looking sales for like 10k or 30k, often several at a time, and they leave too much whitespace on the plots.
  • Some counties have bumps in their right tails, e.g. Limerick and Clare (third column, second and third) and these might correspond to commercial purchases of entire apartment blocks, or maybe ten units at a time, data which really ought to be separated from single house sales. Kerry (column 3, bottom) is a county with a thick tail to the right, so it presumably has a sizeable high end market.
  • But our interest here is in finding value. Leitrim houses might be cheap, but there aren’t many of them. Sligo (column 2, fourth) has two groups and I know from living there that these correspond to more expensive new developments in the rapidly expanding and very fashionable Strandhill peninsula, between the town and the coast, and basically everywhere else.  Among the more expensive counties, Kildare has two peaks, and cheaper houses can be found in Rathangan, which is a beyond Naas.  Wicklow has an uneven distribution too. I’m particularly interested in Wicklow cos it has sea, mountains and it’s close to Dublin. So let’s look at the details.
  • Wicklow is unusual because its has so many peaks (wha’ wha’). Houses in the North East are stupidly dear, like South East Dublin prices, but as you move south, and away from the capital, prices go down. If we look at the actual towns, things become a lot clearer. Delgany and Greystones are a lot more expensive than Rathdrum and Rathnew, so if you want value, then that’s the place to go, because those are the villages which are finally being swallowed up by the never-ending expanse of Dublin.
  • http://a2dez.net/wp-content/uploads/2022/09/wicklow_house_prices_by_town.html
Click for interactive version

Coming soon

The last graphic clearly needs to be interactive, so that you can click on the property, and change it by county. Once I work out how to do this on my rather old wordpress website, I’ll update.

I’ve also spent a lot of time cleaning up the property price register data from 2010-2021, and the biggest problem is to group addresses according to their towns and areas. In 2022, they started lobbing Eircodes in instead of postcodes, a noble pursuit, but the problem is that the humans entering the data, who don’t have the eircode sitting in front of them, cannot just add in the postcode from memory. So you actually have more empty data now than before. Once I fix this I’ll add plenty more on this topic.

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