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HOME-BUYERS HAVE raised concerns about property prices being inflated by bidding wars as people struggle to view houses amid the Covid-19 pandemic.
Since January, viewings of properties available to buy or rent have moved online.
Under the Level 5 guidelines, physical viewings are “only permissible at the point where a tenancy agreement is being entered into or where a contract for sale has been drawn up”.
The government says this approach “balances the need to avoid social interaction with the need to provide a pathway to tenancy and home ownership for those who need it”.
Non-essential construction has also been suspended until at least next month.
Home-buyers have raised concerns about the impact the pandemic is having on house prices, and have called for viewings to be done in a Covid-safe manner before a property gets to the ‘sale agreed’ stage.
A number of people have said, in their experience, while most estate agents are sticking to the guidelines, some are allowing viewings prior to a sale being agreed on a property – giving certain buyers an unfair advantage.
Many homebuyers expect that the ultimate cost of a house will not always match the initial price, but the sheer scale of increase in the current market is now of concern to buyers.
Estate agents have acknowledged that restrictions may be having an impact on prices, but say the wider issue of a lack of supply also plays a major role.
In recent days The Journal has spoken to several people who are trying to buy a home in Dublin city or county. In a number of cases, houses sold for tens of thousands of euro above the asking price and, in one case, €120,000 above the asking price.
‘Online viewings are useless’
Margaret* and her partner have been looking to buy a house in the north Dublin area for just over a year. Their budget is about €400,000.
She told us: “You can’t view houses, and people are putting bids on houses without viewing them. You feel pressured to put a bid on a house just to view it.
“Photographs and videos on estate agent websites are most of the time taken with a wide-angle lens and with a high ISO so the rooms look bigger and brighter. So it’s impossible to get a true picture of a home until you have set foot in it.”
Margaret has done a number of virtual viewings, explaining: “You and the estate agent look at a video of the house and they answer questions. Those are pretty useless.”
She said looking for a house during the pandemic “has meant watching prices creep up and up”.
You also don’t trust the estate agents as houses are frequently taken offline and then put back online at higher prices. I’ve seen multiple homes in the Dublin area I’m looking in being put online, then removed, then put back online at €20,000 to €30,000 higher prices.
“When I asked one estate agent why the home was taken offline at €430,000 and put back on at €450,000, she said it was because they advised the seller that they could at least get €450,000 for the house. This then becomes a new baseline for prices in that area and artificially inflates them.”
Margaret said “it’s hard not to see a situation where prices do not continue creeping up, given that it is in both sellers’ and estate agents’ interests to see these prices increase”.
“If you have €100,000 to spend on renovation, then you might be able to get a house for a ‘decent’ price, but that house will invariably need full rewiring, replumbing, central heating, etc.”
If you don’t have that kind of budget, Margaret said you have to go for a so-called turnkey house that is ready to move into, but “it’s that cohort of houses that is getting more expensive”.
‘A bidding war’
Claire* and her husband sold their home shortly before the Covid-19 pandemic hit, and they have been renting a house since then.
They have a young daughter and “outgrew” their first home. They’re looking to buy a home in south Dublin, so their daughter can stay in the same crèche, and have a budget of about €700,000.
She said she’s aware they are “the lucky people” who still have jobs and can house-hunt.
“You can’t actually view [the house] yourself until you go ‘sale agreed’ in principle. So, it just feels like everything’s weighted towards the estate agents because it suits them to have a lot of interest, particularly at a time where there has been nothing on the market.”
Claire said the situation encourages “a bidding war in a highly competitive market before anyone has even had a chance to view the property in person”.
“As it stands, three properties we’ve been looking at are currently not saying ‘agreed’, but have offers on them anywhere between €100,000 and €150,000 over the asking price.
People will bid going, ‘Well, I can always drop out after the walk-around if I’m not interested anymore.’ While you can withdraw your offer after viewing the property, you have already been involved in the process of pushing that price up substantially.
“One agent we contacted about a house that went on the market a week ago said that there were 10 bids on the property and they wouldn’t even disclose how many parties were involved.”
Claire and her husband are in their 30s and, “considering the financial challenges facing our generation” are “incredibly grateful to even have the opportunity to be able to buy a house right now, but it is so disheartening to see yet another barrier being put in our way”.
“It just feels woefully irresponsible and shortsighted that they aren’t appreciating the impact of this on all of us down the line when we no doubt start to hear terms like redundancy and negative equity being bandied about again,” she said.
Claire worked in a bank during the recession and is well versed on what negative equity means as she regularly had to discuss it with customers.
“Here we are, within my adult lifetime, possibly setting up the exact same circumstances again. Granted, the banks are a little bit more cautious about their loans, they really do make a jump through hoops for the mortgage application, so they can say due diligence is done on their end, but it’s all the other factors that play a part.”
Claire said if the government doesn’t try to combat the inflation of house prices, there will be another property crash sooner rather than later.
‘A bigger nightmare than usual’
Caroline* and her husband have been looking to buy a home for the past few months, “basically in any part of Dublin, north or southside, that’s not miles out of the city”.
“We’re at the lower end of the market in terms of budget so you’d get maybe four or five properties a week going up online with an asking price we could potentially afford.
“I can’t tell you how many properties we’ve expressed interest in in three months, with no response at all from the estate agents. We learned very quickly you have to follow up with multiple emails and calls to their office to get them to get back to you with the most basic information on places.”
As they didn’t house-hunt pre pandemic, Caroline said, they don’t know any different, but “compared to the experience of our family and friends who bought houses before this, it seems like it’s an even bigger nightmare than usual”.
“When we got mortgage approval and started the search people kept saying to us that it was so exciting and asking if we were enjoying it. It’s not exciting, and we haven’t enjoyed it.”
In Caroline’s experience, “different estate agents seem to have different approaches”.
Some will just say they’re not doing viewings, either virtual or in-person, until after the pandemic. But then we’ve later seen some of those places go ‘sale agreed’, so they were obviously still taking bids from some people.
Caroline and her husband have done some virtual viewings and placed a few bids on houses “before setting foot inside the place” and mostly “just based on photos, not even a 3D tour”.
“Properties seem to be selling for around €30,000 more than their asking prices at the moment, we’ve seen bids go up that much in one day on some, so we were almost instantly out of the running for most of the ones we were interested in and we thought were in our price range.”
Caroline said some estate agents she has dealt with are letting people view properties after they’ve put in an offer but before it has been accepted.
“In one case we were allowed into one on a weekend when they had arranged for appointments for a good few people. Appointments seemed to be back-to-back, we saw the person before us coming out and there was someone waiting as we left after our ten-minute slot.
“That house didn’t have anyone living in it and the agent had us sanitise our hands before going in, and wiped down surfaces, etc. We were outbid with that one over the two days after that – I think the fact that people had been able to go into it pushed the price up.”
Houses selling for €120,000 above the asking price
Graham is also looking to buy a house in Dublin. He moved back to the capital about two years ago after living abroad for years.
Since December, he has withdrawn from bigging processes on four houses due to the escalating price.
In the most recent case, a house in Rathmines on the market for €550,000 went ‘sale agreed’ at €670,000. Graham knows a neighbour who bought a very similar house on the same street for €545,000 in March 2020.
“It’s exactly the same house,” he said.
His budget is about €600,000 and he’s looking to buy in south Dublin as that is where he was raised and where his family lives.
Graham previously owned property in London and said, in his experience, it’s much easier to buy there than in Dublin.
“It’s just so funny that you go to a big city, you know, this aggressive metropolis, and things like property purchases are so much easier. It almost feels harder in Dublin.”
Graham said as there is a lot more stock in London, “there’s so much movement that it’s actually really straightforward doing things in big cities”.
He said it’s unfair to blame buyers for pushing up prices as most people just want to buy a home for themselves or their family, and may be afraid prices will rise even further if they don’t act now.
Some people are probably just panicked and they know that if they don’t buy now, they might be waiting several months. So they’re kind of thinking you know what, we’re going to be in it for the long haul, we’re not going to move out for a long time, so just take the hit, at least we move on with our lives.
Graham said in some cases, estate agents are letting viewings happen prior to a sale being agreed on a property, adding: “You can get around the rules.”
In one case a sale fell through on a property in December and Graham made an offer on the house. He got to view it, but it was not at the ‘sale agreed’ stage.
He said one estate agent told him there are some different approaches to the restrictions as they are actually “advisory, not mandatory”.
Graham is going to keep renting for now and hope that the market improves later this year.
“It does feel like Ireland has an absolute yo-yo property market, I’ve never seen anything like it. Actions by few and decisions by fewer are causing a tidal wave that is going to impact the next two years,” he said.
‘A frenzy of bids’
The Journal spoke to a number of estate agents who said they are sticking to the viewing guidelines set out by the Property Services Regulatory Authority.
The PSRA’s current guidelines state that viewing by the public of properties is permitted by appointment only where “the property has gone sale agreed and contracts for sale drafted”.
Barry McDonald, an REA McDonald estate agent based in Lucan, said he only shows properties to bidders “once their offer has been accepted and deposit paid”.
“We are finding that some are bidding for a number of properties at one time, however, I do believe that anyone who is making offers is keen to buy, and it is just a bit of a frenzy to get the bids in.”
McDonald said he believes that most bidders have a genuine interest in buying the property in question.
“I don’t believe that most bidders are putting in bids just to get a viewing – they are bidding in the hopes that a deal is agreed, safe in the knowledge that if the house is below their expectations once they do get in to see it, they can withdraw from the agreed sale.
“In the vast majority of cases, however, sales are sticking and progressing toward completion.”
McDonald said inflation in values is “more attributable to the extremely low levels of current supply, and the high levels of demand, which is pushing up prices”, than Covid restrictions.
Graham Murray, a Regional Director with Sherry Fitzgerald, said that getting to ‘sale agreed’ is not “straightforward, casual and easy thing” so people who get to that stage are usually serious about buying a property.
He said, because the country is in Level 5, many people are looking for a house within 5km of where they live now. As such, they can walk by the house they’re interested in and check out the area.
“A lot of people do know what they’re getting involved with. They could be living in the area, renting the same type of home.”
Once the sale is agreed on a house, Murray takes a booking deposit (typically 2-3% of the price of the house). However, the person still has a cooling off period where they back out of the sale.
Murray said he understands buyers’ concerns but estate agents “can only go by by the government guidelines” in terms of viewings.
“We’re trying to work as safely as possible within the government guidelines, that’s all we can do.”
He said if buyers are not comfortable making an offer on a house before seeing it in person, they should hold off until restrictions ease.
If the government announcing an easing of restrictions next month, more houses are likely to come on the market.
“The market won’t be seasonal this year,” Murray said, “normally you have a spurt where there’s a lot of activity that quietens down for example over summer, that won’t happen this year”.
There will probably be a lot more property coming to the market over the course of the next four weeks, and then that will continue.
Murray said demand still far outweighs supply, and that the Covid-19 pandemic has exacerbated this.
“We’re working in an environment that is obviously very different to what we’d normally be working through. Even though pre-Covid there was a shortage of stock in the market, I suppose Covid has probably compounded that.
“Obviously when there is a shortage of stock within any marketplace, be it property or elsewhere, a lack of supply will always have an influence on pricing.
“If there’s 10 buyers looking for a house and there’s only one house available, of course that’s going to lead to competition,” he said.
Murray said that while many people have been “adversely affected” by the pandemic, some people who kept their jobs have been able to save money for a house.
He said stock should improve in the coming months, but he understands that some people will not be eager to wait that long.
“We’ve gone through three lockdowns at this stage – if you wanted a bigger garden or you wanted more space in your house, you’re probably quite determined to get that to happen for yourself or your family.”
‘Issues of concern’
When asked about buyers’ concerns, a spokesperson said the Department of Housing has “policy responsibility for social housing delivery, the planning system, domestic rental sector and building standards” but not ” overall responsibility for the wider property sector”.
“Nonetheless, the Government is aware of certain issues of concern in the sector surrounding house sales and viewings etc. A decision will be made regarding the current restrictions that apply nationally shortly. The issues raised by estate agents will be considered as part of this process.”
Guidance on property viewings was issued by the PRSA, who are under the aegis of the Department of Justice.
A spokesperson for that department said the PRSA document gives “detailed guidelines for consideration prior to arranging a viewing of a property, what happens during a viewing, post viewing tasks and what to do when a rental agreement is reached including:
The spokesperson added that the guidance “details the measures that must be taken at each level of Covid restrictions as directed by government and property service providers should adapt as government restriction levels are updated”.
*Names have been changed at the request of the interviewees
Fair play Even. Keep developing where it’s clearly working for him. Plenty of time for bigger contracts at bigger clubs. Too many make the move very early and then seem to fade away so I think it could be good for him.
@Sean Partidge: correct decision, seems to be the right place for him at the moment. He’s young and there’s a long way to go yet. Well done Evan. You’re a diamond.
✔
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