West Cork Property Market in Review and Outlook for 2021
By Con O’Neill, Director, Sherry FitzGerald O’Neill
I think in years to come, we will look back on 2020 as being a catalyst for a lot of change in society. Work-life balance is one aspect which has come into focus with people reassessing what they want in life. The proven test cases of employees, across all sectors, to work from home has set in motion a trend which will be difficult to reverse.
When visiting Google Head office in Dublin in a past life, their attempt to replicate a functioning town/community in their office space always struck me. In creating a space where employees never want to leave, they have added a traditional pub, coffee docks with barista’s on hand, numerous restaurants, library, rooftop garden, informal meeting areas, etc. They are in essence attempting to replicate Clonakilty, Dunmanway, Skibbereen, Schull and Bantry without any of the authenticity, while as much as they may try, there is no replicating our beaches, hills and mountains.
In 2021, people have a minimum expectation in life when deciding where to live. People want to live in an area with vibrant cafés, restaurants, pubs, retail and cinemas. They want functioning communities with outlets for children in the form of schools, sports teams, drama groups, playgrounds, etc. We are lucky in that the towns and villages of West Cork meet these requirements and are well placed to thrive into the future. I always felt that a great starting point for any community plan is a simple motto, ‘make West Cork the best place in Ireland to live’.
From a personal point of view, we were absolutely delighted to be awarded Best Office in the Small Town Category and selected as one of the 4 finalists in the Sherry FitzGerald Franchise of the Year Awards 2020. With 95 offices nationally competing for the awards, winning the Small Town Category and getting to the finals is a significant achievement for us. This award is a true testament to our fantastic team and our wonderful clients.
We hope you enjoy our review of the West Cork property market. If anyone has questions on any of the below, feel free to email me at firstname.lastname@example.org.
Property Prices in West Cork
Sherry FitzGerald Chief Economist Marian Finnegan published her latest analysis of the Irish Residential Market for quarter 3 on October 1st:
Average national prices, excluding Dublin, rose 1% in the third quarter and 1.3% since the start of the year. Price growth was particularly strong in the West region in quarter three, increasing 2.5%. All regions across the country recorded a rise in prices in the quarter.
Due to the relatively low number of transactions in our West Cork towns, the most reliable measure of property prices is the Median Price published by the CSO. The Median Price per Eircode for the 12 months to September 2020 shows P75-Bantry at €160,000 (€174,500 – Nov 2019), P81-Skibbereen at €210,000 (€199,000 – Nov 2019) and P85-Clonakilty at €255,000 (€232,500 – Nov 2019).
Despite the unprecedented shock of the pandemic on the economy to date, residential property prices have demonstrated a remarkable degree of resilience. There are a number of factors feeding into this.
- Firstly, supply shortages have been further exacerbated by COVID-19. A report by Davy/Myhome.ie for Q3 2020 showed that supply levels were down 25% on the same time in 2019. Initial reports with wild predictions over a drop in house prices (see KBC report articulating a 12% drop this year before recovering next year) did enormous damage to the market by putting vendors off selling.
- On the flipside, there has been a surge of demand from both first-time buyers and the holiday home market post lockdown. Reports of a 12% drop in property prices and record levels of savings on deposit nationally seem to have been the catalyst for record numbers of mortgage approvals. Figures from the Banking and Payments Federation Ireland show that October was the busiest month for mortgage approvals since BPFI began compiling the numbers in 2011.
- We have seen some very strong prices for property in 2020, especially in the holiday home market. Cash buyers from Dublin and Cork have been to the fore. The shortage of supply and uptick in demand, anecdotally, has had the effect of increasing prices. Overall, it must be noted, central bank rules limiting the majority of borrowers to 3.5 times salary along with loan-to-value restrictions, have kept prices in the residential market relatively stable and look to be preventing the double digit price growth of the Celtic Tiger.
Who bought property in 2020?
In 2019, 1 in 3 properties we sold at SF O’Neill was to an international buyer. 2020 saw this figure reduce to 18% with buyers from all corners of Ireland coming to the fore in their place. West Cork has never been as popular. Cash buyers from Cork and Dublin have been strong in the holiday home market with the usual suspects of Courtmacsherry, Rosscarbery, Glandore, Baltimore, the Mizen Peninsula and Glengarriff proving particularly popular. It should be noted however that the whole of West Cork has benefited from the uplift.
The make up of buyers has remained broadly consistent in the year with owner occupiers remaining the most prevalent. This cohort accounted for 80% of all purchasers who bought through the overall Sherry FitzGerald Group in the first nine months of the year, with first-time buyers accounting for 54% of all owner occupiers.
The withdrawal of investors from the market has also remained consistent accounting for just 12% of purchasers with the overall Sherry FitzGerald Group, while 32% of vendors were selling investment properties.
The reported influx of remote workers to West Cork has been much publicised. The phone calls started once lockdown hit and have continued. Most enquiries are still tentative with workers in limbo as to whether jobs will be permanently remote into 2021 and in a hopefully post COVID-19 world. To date, seven of our closed sales in 2020 were to remote workers looking to base themselves in West Cork. Anecdotal evidence from our level of enquiries and applicants registered to our database suggest it could be a strong market in 2021.
Outlook for 2021
As 2020 has shown, it is very difficult to predict too far into the future in the present climate. We are extremely positive for the first six months of 2021 and here are my thoughts:
- Strong demand for property to continue
Given the record number of mortgage approvals reported by the Banking Payments Federation Ireland which show that October was the busiest month for mortgage approvals on record, demand will be strong into 2021. With a vaccine roll-out hopefully in full swing, we anticipate positive consumer sentiment with confidence high. With levels of cash on deposit in financial institutions at a record level nationally, property and especially the holiday home market will be in line to benefit.
- Supply of property
This is the most difficult element of the market to predict. Anecdotally, Brexit put some people off selling in 2018 and 2019. COVID-19 has had a far more significant impact on supply in 2020. We are hopeful that we will see some kickback in 2021. We see the trading up and trading down market being particularly strong. With restricted movement during lockdown, the suitability of a house to meet the needs of a family or individual has come into focus, from those isolated in rural locations looking to move into towns/villages to families who have outgrown their property. People are going to be on the move in the first half of 2021.
- Property prices
Property prices have been remarkably stable for the last three years with low single digit increases/decreases. With the constraints on mortgage lending effectively controlling price inflation, namely central bank rules limiting the majority of borrowers to 3.5 times salary along with loan-to-value restrictions, the trend is expected to continue through 2021.
There is finally some light at the end of the tunnel for the rental market. The private rental market has been pushed to breaking point with the negligible number of social houses delivered since the downturn and the state relying on the private rental market to meet the demand for social houses. Figures provided by Maurice Manning, Director of Housing at Cork County Council, to the Southern Star in July provide a number for just how much pressure is being applied. In the West Cork Municipal District area, the Council has leased 448 housing units for people on the local authority’s housing list. With work commenced on 107 social houses in Clonakilty and 50 in Skibbereen, pressure on the market should ease. Bantry’s social housing need has suffered a setback however after a 52-unit development hit delays with an appeal to be heard by An Bord Pleanala.
About the author
Con is the 4th generation of the family in the business. He graduated with a BBS, Accounting and Finance, degree from the University of Limerick in 2010 before going on to complete an MSc Computation Finance the following year. He spent 5 years working with Irish Fin-Tech firm First Derivatives which included stints in Moscow, Dubai, Stockholm and Dublin. In 2014, First Derivatives nominated Con for the GradIreland Graduate Employee of the Year award where he reached the final 6. While working in First Derivatives, Con studied an MSc Real Estate from the University College of Estate Management in Reading which he graduated from in 2017. He joined the team at Sherry FitzGerald O’Neill in January 2018 and hasn’t looked back since. Con works in all aspects of the business from residential/commercial lettings and sales, to marketing and social media. His main interests include all sport but especially rugby. He is obsessed with local history and his rescue dog Bingo who features regularly on the company’s social media accounts.