Today, I am writing about trends in the property market against the background of moving house, and so this article will be a little bit of testimony as well as proper analysis.


For the record, we are also moving from one area of south Dublin to another. Therefore, trends in the south Dublin market have been of acute personal, rather than professional, interest.


Luckily, we don’t have to move quickly, because it seems to me that things are taking a long time – both to buy and sell. This is a good thing, because what gets people into trouble – in any decision – is feeling that you have to execute too quickly. Taking your time is essential in any purchase or sale, unless of course you are in the speculative game.


One of the fascinating aspects of the past year is the way in which the property market in richer south Dublin has stalled, while less expensive parts of the city are doing well.


This is largely down to demographics. The baby boomers – the Pope’s Children – now want affordable family homes without massive leverage and they are bidding against each other in areas closer to the city. Talk to any thirtysomething who is trying to buy a family house now, and you will hear tales of intense competition, with bidding wars not uncommon.


Out in the slightly more rarified suburbs, people tend to be older, and are either trading down a bit – or more likely sideways – and so the market is slow and people can afford to take things slower.


The exceptions, of course, are those who bought on leverage in 2015 just before the Central Bank rules changed when things were booming, hoping to sell quickly in 2016.


These guys must be fretting a bit because a comprehensive piece of analysis in this paper today supports the anecdotal evidence that the market in south Dublin has weakened substantially.


The data show that in some of the most expensive areas of the city, the average sales prices achieved in 2016 have been substantially lower than the average sales prices achieved in the same period last year.


For example, analysis shows a fall of well over 20 per cent in Killiney North and the South Docks area. These two areas would have been seen as among the most expensive in Dublin, the former because it has been traditionally a wealthy area and the latter because of its proximity to the wealth-creating hub that is Silicon Dock and the IFSC.


Digging a bit deeper, the data reveals that in the electoral district of Foxrock-Carrickmines, one of the city’s swankiest areas, the average sale price has fallen more than 18 per cent between the two periods. Parts of Blackrock and Dun Laoghaire show a fall of about 15 per cent on average sales prices achieved.


Meanwhile, the salubrious northside areas – such as Sutton and the village of Malahide – have also fallen.


Although estate agents would not agree, not least because they make money on each transaction, a slower, more chilled-out process for buying and selling houses is no bad thing. In fact, it is a good omen.


Ireland needs to avoid another property bubble at all costs. In commercial property, there may be signs of a bubble emerging as foreign buyers who drove prices up and yields down now want to get out quickly.


However, in residential, there’s no sign of that. From here underlying factors such as demographics and the supply and demand of property as well as income growth in the economy will determine prices and the speed at which deals will be done.


In contrast in early 2015 and in 2014, there was a real risk of a bubble. Property was moving too quickly, with buyers and sellers in a frenzy, all suggesting a bubble. One of the greatest signs of a bubble is the mania whereby people feel if they don’t trade now, prices will move yet higher and this brings forward demand, creating a herd-like panic on the upside, which is typically matched by herd-like behaviour on the downside.


There is no fear of that right now. In fact, the market is determined much more by supply and demand today than it has been at almost any time since 2000.


So what’s going on in the rugby areas of Dublin? What explains the slump in the Ross O’Carroll Kelly backyard? Remember, this is the “million euro” bracket and typically these houses are not highly leveraged – at least not since the crash. In contrast, football areas, such as Balgriffin in north Dublin, are booming.


Well, the key aspect is value. In areas where nothing has happened for a couple of years and prices have remained low, the past few months have been a hive of buying and selling.


Whereas in areas that ran ahead of themselves in 2014/15, buyers are much more cautious.


We are seeing this trend for value all over Dublin and it can be seen in the disparity between asking prices and prices achieved.


So sellers in north Co Dublin and in the city centre area on average seem to have achieved substantial premiums of about 30 per cent on top of their asking prices in the past year.


In both the north city and south city areas the average selling price was around 10 per cent higher than the average asking price. But in the country’s most valuable property market, south Co Dublin, eventual average selling prices were about 3 per cent below average asking prices.


So what’s the outlook?


First, there is no bubble. This should be a relief to everyone. As someone who is both selling and buying, this is a blessing because what you think you gain on the sale, you give back on the purchase.


Second, demographics will determine the intensity of the market in certain areas. This means that family houses closer to the action in every urban centre will be keenly fought over by young families creating conditions that seem like 2006, but are highly localised.


Third, general income will determine the pace of house price growth. This is again a blessing. Fourth, because of the three preceding points, areas which have seen their prices fall in the past 12 months are likely to see a rebound.


Remember, we can’t take out human nature in Irish house-buying and selling. We all get giddy together and become temperate together. As soon as a few homes in south Dublin get bid up again, by let’s say a few professionals coming back from London, the rumour mill starts up again and people, particularly those with equity, jump in again.


Unfortunately, that’s the nature of things. As long as there’s no massive leverage in the system, decelerations and accelerations in housing activity are just a fact of life – more like mood swings than economic truisms.

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