Gunne Property Market

Gunne Property Market R E P O R T W I N T E R 0 6 Quarterly news from our twelve branches Gunne/ EBS Landlord Survey 2006 Top 1,000 CEO Survey 2006 Ranelagh branch opening

Market Overview The most significant trend witnessed in the residential property market in the last three months is a notable increase in the amount of houses being offered for sale. This had the effect of lengthening the average time taken to sell a property, rather than having any discernible downward pressure on average prices that the media has portrayed. While houses are still selling it is taking some time to conclude transactions as vendors took time to readjust their asking prices and buyers realised house prices were not falling as the headlines suggested. The media has also focused on the decline in sales at auction but this represents only a small percentage of houses on the market overall and is not a reflection of activity in the housing market generally, where as we have said activity is still strong. Comments regarding the possibility of stamp duty reform in Budget 2007 did however create uncertainty in recent weeks which coupled with the impact of rising interest rates stalled house-buying activity to some extent. This was most evident in the mid to upper end of the market. The Minister in choosing to increase mortgage interest relief for first-time buyers will improve affordability for these buyers without artificially driving house prices to higher levels, as was witnessed when the Government made changes to thresholds in the past. This will enable the price growth to slow down at a controlled pace. Now that Budget 2007 is behind us, we expect to see strong market activity re-emerging in the first quarter of 2007, with activity kicking off considerably earlier in the year than normal considering the supply of properties on the market. One has to remember that the Irish housing market continues to be driven by unique economic circumstances and strong demographics i.e. a significant increase in the number of migrant workers coming to Ireland to work, a strong economy and high employment. The general consensus is that housing demand will remain robust but the pace of house inflation in 2007 will be lower than in recent years, which is good news for all, as the double digit rate of growth in recent years was unsustainable. Nationally capital appreciation is likely to be in the region of 3-5% in 2007. This indicates a gradual slowdown in the rate of price inflation and should be seen as positive. We wish all our staff and clients a happy Christmas and New Year. Declan Cassidy Managing Director Gunne Residential Gunne/ EBS Landlord Survey 2006 A recent publication compiled by Gunne Residential and EBS Building Society highlighted a continued strong level of confidence amongst investors in the buy-to-let sector. 43% of respondents said that it is likely they will purchase another investment property within the next 12 months. This figure is consistent with the results of a similar survey conducted in 2005 when 44% of those surveyed said that they intended to buy an additional property. The survey also revealed 38% of respondents are getting a better return on their investment properties than they were only 12 months ago as their rental income has increased in the past year. The Publication can be downloaded from the Gunne website at www.gunne.ie Top 1,000 CEO Survey 2006 Another survey released in recent weeks highlights the strength of demand for residential property in Ireland. 14% of the Top 1,000 CEO s in Ireland revealed that residential property is their number one choice of investment, despite the fact that the pace of house price inflation now appears to be slowing somewhat. 45% of the respondents said they expect residential property prices will increase slightly in 2007, 15% said they expect house prices in Ireland to remain static next year while 2% said they expect a significant increase in residential property prices in 2007. This suggests that investors and occupiers in general remain positive about residential property market performance in the medium term. Ranelagh branch opening Gunne s new Ranelagh Branch opens its doors for business on Wednesday 13th December. Driving the brand in this new venture is Clodagh Murphy, Branch Manager and Louise McGowan, Senior Sales Negotiator. The Ranelagh Branch will cover Ranelagh, Rathmines,Milltown, Clonskeagh, Goatstown, and D8.

Quarterly News Dublin South The South Dublin area remains very active, prices will continue to appreciate but at a lesser pace than has been experienced heretofore. Ballsbridge Branch There is currently a good supply of quality homes on the market in the Ballsbridge, Donnybrook, Sandymount, Ringsend and Irishtown areas, some of which were withdrawn from auction in recent weeks. Although, properties have not been selling well at auction over the last two months, realistically priced properties which are being offered to the market by private treaty are selling well. There is a good mix of properties on the market in these areas at present, with a supply of different property types and sizes and in different price ranges available. Realistically priced, welllocated properties are trading best at present with homes which need little or no refurbishment in most demand. Rising interest rates and some concerns about the prospects of property market performance are causing a little buyer apathy, although many are now realising that what is being experienced is a temporary readjustment rather than a downward trend. House prices are still appreciating in the Dublin 4 area, but similar to all sectors of the residential market at present, house price inflation is clearly not as strong as it has been in recent years. We anticipate strong activity and strong steady prices being achieved for houses in Dublin 4 in the early part of the New Year. We expect that activity will pick up considerably in the first half of 2007. However, vendor s price expectations will have to be realistic if properties are to sell. Dun Laoghaire Branch The last couple of months have seen a slowdown in buyer activity in the Dun Laoghaire area. To some extent this is due to an increase in the number of all types of properties coming to the market in the area at a time when rising interest rate movements are impacting on demand. Having said that, many vendors are realising the importance of having realistic price expectations in the current market and well-priced properties are still attracting a number of competing bidders. Larger family homes with prices ranging between E1 million and E1.5 million have been most affected by current market conditions on the basis that these properties have tended to be offered for sale by auction and the auction market has been hardest hit in recent weeks. It is increasingly likely that fewer properties will be offered for sale by auction next year. Over the coming three months a more stable housing market is expected. Demand in all sectors is expected to pick up after Christmas and this will be particularly evident in the mid-market for people trading up to properties of up to E650,000 in value terms. Prices will continue to appreciate but at a lesser pace than has been experienced heretofore. Terenure Branch Bray Branch From a situation earlier this year when there was an undersupply of quality homes in the areas covered by the Terenure branch and strong prices were being achieved both at and before auction, the market has now slowed somewhat. To some extent this could be attributed to vendors being unrealistic at a time when the housing market was showing signs of cooling. As a result many properties were withdrawn from auction in recent months and as a result the supply of properties on the market has increased. Prices are therefore stable but not rising at unsustainable rates as was the case when supply was an issue. Demand for quality family homes in the area remains strong and we are seeing evidence of older pre-63 properties coming to the market for residential use. The past three months has seen a steady supply of properties come to the market in Bray. Due to the increase in property available in the market the sales time for some properties has extended. The average length of a sales campaign in the area is now in the region of six to twelve weeks. This has resulted in vendors having to become very realistic when pricing their property in the current market. There has been a slowdown in auction sales at the upper end of the market although properties that are withdrawn at auction are actually selling within a relatively quick period days after. Good quality three bedroom semi-detached properties are the most requested type of property in the Bray area. An average three bedroom semi-detached property in Bray can still be purchased for less than E500,000, making it a popular area for those trading-up. While there has undoubtedly been an increase in supply in the D6, D12, D14 and D16 areas which is resulting in a stabilisation in price increases, demand remains strong and we expect good trading activity in the coming months, particularly for properties which are reasonably priced in the mid-market range. Following a period of less activity we expect that demand for properties in the Bray area will pick up over the coming weeks, with particularly strong demand from people trading up. House price increases have moderated and now a period of more benign growth is envisaged for the Bray market.

Dublin North & West The North/West market has continued to experience an unprecedented demand from the first-time buyers market. We expect the first-time buyer market will continue to perform strongly over the first half of 2007. Phibsboro Branch The Phibsboro area has been relatively unaffected by the recent slowdown in housing market activity on the basis that demand is primarily driven by first-time-buyers who are still very active. There is currently a good supply of all types of properties on the market in the area from apartments and starter homes to large houses at the upper end of the market. Buyer demand is strong, with well-priced, properties in walk-in condition selling within a matter of weeks on average. Because of the prominence of firsttime-buyers, there is particularly strong demand for apartments and terraced properties in the area. The average price of a two-bed apartment in the Phibsboro area is now selling in the region of E335,000 while the average price of a period terraced residence is approximately E650,000 at present. Due to the increase in properties on the market, buyers trading-up in the area now have plenty of choice. A number of new developments will be launched in this area over the coming months, which to some extent will ease pressure in the second-hand market. We expect to experience continued growth in the housing market in the Phibsboro area over the coming months. We expect to see a notable increase in the number of offers being made and we also anticipate sales being completed withinin shorter periods of time. Lucan Branch The last 3 months in the housing market in the Lucan area have been challenging. Since September there has been a significant increase in the amount of property coming to the market while demand has remained relatively subdued. In addition, a steady supply of new home developments in the Lucan area have taken some buyers from the second-hand market. With current market conditions, purchasers are taking longer to make decisions so the average sales campaign is now taking 2-3 months and house prices are at best remaining flat. Vendors therefore have to be realistic on pricing of properties in order to complete transactions. The corollary of this for purchasers is that the choice of property for sale in Lucan has never been as good and good value is available. On the basis that the bulk of buyers in the Lucan area are firsttime-buyers, there is particularly strong demand for duplex type properties, while the availability of 3 bedroom semi-detached properties is proving positive for purchasers trading-up in the area. Strong demand prevails for properties in areas such as Kilmainham, Chapelizod & Inchicore from city-based professionals. Budget 2007 has delivered to those that need relief most. Activity will pick up considerably in the Lucan area and purchasers will benefit from the choice of affordable properties on offer. It will take some time for the current supply of housing stock on the market to be absorbed. The availability of new homes schemes is now slowing up and this should strengthen the second-hand residential market. Fairview Branch Throughout the last quarter, there has been no let-up in terms of the supply of residential properties coming to the market in the Dublin 3 and Dublin 7 areas. Since September, activity in the housing market went through a slowdown and house sales were taking longer to agree with vendors holding out for higher prices and purchasers holding off bidding, waiting for a price reduction. However, this trend has somewhat reversed in recent weeks with vendors now more realistic in what they will accept for their homes and buyers now conceding there is going to be no reduction in sales prices. This re-adjustment of asking prices for many houses and a levelling off in terms of the pace of house price inflation, will be the impetus to encourage buyers and stimulate activity in the market again. The average selling price for a three bedroom semi-detached home in the Clontarf area of Dublin 3 area is now in the order of E1 million while semidetached homes in the Dublin 9 postal district are achieving in excess of E850,000 on average. The most active buyers in theses areas at present are buyers trading up. On the basis of the slowdown in activity that has transpired in recent months, there are now more homes on the market than there are normally at this time of year. Ultimately, house-buying activity on the north side of Dublin should kick off earlier than usual in the New Year. We expect strong activity in the area in 2007, although the pace of house price inflation will be more subdued than in 2006. Swords Branch Market activity in the housing market in Swords area over recent weeks has been slow as a result of negative sentiment regarding the residential market. This is evident by a decline in demand for housing in the area generally. As a result, houses that were selling within a two to three week time frame are now taking five to six weeks to sell. Many vendors are reluctant to reduce prices and as a result some properties are being withdrawn. Other properties are being offered for rent and this has led to a notable increase in the availability of rental property in the Swords area in recent weeks. The Swords area is still a very attractive location with particularly strong demand from first-time buyers for attractively-priced housing in this area. There is particularly strong demand for terraced properties with gardens which are similarly priced to apartments in the area. Superior transport links and the promise of a Metro connection to the city centre is particularly attractive to buyers. Budget 2007 doubled mortgage interest relief for first-time buyers. We expect that purchasers that have delayed purchasing decisions in recent weeks will re-emerge and that house-buying activity in the Swords area will pick up considerably. We also expect strong demand prevailing for new housing developments being completed in the area with some uplift on pricing expected in the first quarter of 2007.

Country Overall, first-time buyers continue to dominate and properties priced on or below the stamp duty threshold are selling well. Navan Branch There has been a slight easing in activity in the Navan housing market in recent months, with many buyers waiting for the outcome of Budget 2007. As a result of the Budget announcements we predict that sales of residential property will pick up pace considerably. The impact of rising interest rates was also responsible for curtailing demand to some degree. This was particularly evident at the upper end of the market, with larger detached properties taking longer to sell on average. However, with first-time buyers dominating activity in the housing market in the Navan area, demand for property priced under the E317,500 stamp duty threshold, remains strong and properties in good condition are selling within 6-8 weeks of coming to the market. For the most part, 3 bedroom semidetached properties in the area are still available at prices less than this threshold. Meanwhile 4 bedroom semi-detached homes are achieving in the order of E360,000 and 4 bedroom detached homes are achieving between E420,000 and E460,000 on average. This is relatively affordable in comparison with the Greater Dublin Area and investors remain active. Following the slowdown in activity that has been witnessed in recent months, we expect to see a pick-up in activity in the housing market in Navan in the first half of 2007. Purchasers and investors still view this area as an attractive location and improving transport links will continue to support purchasing decisions. Drogheda Branch Interest rate increases and affordability issues do not appear to have impacted as negatively on the market in Drogheda as in other locations. Vendors in the Drogheda region have reacted well to evidence of a slowdown and have been setting house prices at realistic levels. As a result, activity has continued at pace in this market. Drogheda s market remains strong with demand from first-time buyers still exceeding supply. With a scarcity of supply of 3 bed semi-detached homes in the area, any properties that come onto the market that are priced under the E317,500 stamp duty threshold are selling relatively quickly. There is particularly strong demand from commuters for properties in close proximity of the train station. Activity is now expected to pick up pace again in the coming months as interest rates start to plateau. Prospects for activity in the Drogheda area are very promising. Rapid population growth will continue to support demand for homes in the medium term. Coupled with significant investment in housing in recent years there has also been significant provision of both retail and the commercial accommodation in the town. The Drogheda market will continue to perform strongly with welllocated affordable properties remaining in short supply. We expect that the first time buyer market will continue to perform strongly over the first half of 2007 and that activity in the upper end of the market will pick up in the New Year. Naas Branch Quarter Four 2006 has witnessed an obvious slowdown in the market place across all sectors. This is due to a number of factors converging over a short period of time. The interest rate rise in the Autumn, a slight over-supply of property brought on by the re-entry to the market of failed auction properties in the summer and Budget 2007. This combination of factors created a buyers market for the first time since 2001. Prices have stabilised in the Naas area in Quarter Four. With little or no multiple bidding scenarios occurring, prices have remained static. This is good news for the purchaser as they can currently negotiate with the agent without the stress of competition from other parties. There is no increased demand on any one particular type of property over another in the area, although, demand is higher for properties priced on or below the stamp duty threshold of E381,000. Affordability is vital to most firsttime buyers in the market and they are not prepared to go into the 6% stamp duty bracket. Monaghan Branch The residential market in Monaghan has cooled somewhat over the last two months due to a combination of factors. Rising interest rates and pre-budget hesitation were some of the reasons cited for this slowdown. However, there is still strong demand from first-time buyers, particularly for properties that are on the market at less than E317,500. The increased mortgage interest relief for first-time buyers should renew their enthusiasm to enter the market. For the most part, three bedroom semidetached houses in Monaghan can still be bought at less than the stamp duty threshold and as a result there is strong demand for starter homes in the Monaghan area. On average, three bedroom semi-detached homes are currently achieving between E220,000 and E250,000. A number of new housing developments are due to be developed in the Monaghan area in 2007 which should create a better balance between supply and demand. While the starter home market is strong, in recent months one-off detached properties on the market for prices between E450,000 and E550,000 have been slow to sell. The only concern for the first quarter of 2007 is that some vendors may be unrealistic with their expectations of price. We should see a steady supply of property available in 2007 together with a good demand. A good variety of properties will appear in the springtime. Advice for buyers in 2007 is to act now while the choice of stock is still there. The slowdown experienced in the Monaghan market in recent months will be reversed now that the Budget announcements have been made after the Christmas break. Activity is expected to pick up significantly over the coming months.

Branches Ballsbridge 01 632 3000 Dun Laoghaire 01 2801 719 Fairview 01 8335 844 Lucan 01 6280 300 Phibsboro 01 8306 426 Ranelagh 01 499 5050 Terenure 01 4064 500 Swords 01 8079 700 Naas 045 895 440 Bray 01 2760 740 Monaghan 047 81405 Navan 046 9022 100 Drogheda 041 9832 332 www.gunne.ie