The home transaction process report
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What is the main topic discussed in this episode?
Breakfast Business with Enterprise Ireland on Newstalk.
Now, you're welcome back to Breakfast Business with me, Emmet Oliver. It's great to have you along on this Monday morning. Now, the average property in the existing homes market has been sold once every 50 years. Extraordinary number, really. That's according to a new report from the property portal My Home in association with Bank of Ireland, which found that the rate at which existing homeowners with mortgages move is now less than than half of the UK level. And Conal McQuilla, the chief economist of Bank of Ireland, is here in studio to talk me through what's going on. Conal, you're first of all very welcome. We talk about an opaque process. Can you just give us some idea what you mean by that?
First of all, there's a recent survey from the Competition and Consumer Protection Commission.
What does the report say about the average property sale frequency?
In that survey, only 16% of homebuyers felt that the market was transparent. I think also one of the key things in our report today is that, like in the UK where the asking price is the asking price, and typically transactions are settled at the asking price, What we've seen in Ireland increasingly is this premium over the asking. So about 40% of properties sold about 10% over the asking price. About 1 in 6, 1 in 7 sold over 20% over the asking price. So that's not a good place to be. If you're a home buyer, you're kind of guessing, you see the asking price, you're sort of saying to yourself, will it finally settle 10% over that number? So if it's, say, listed for 400,000, is it going to be 450,000, maybe 500,000?
So that shows that asking prices are a poor guide to affordability for homebuyers. It adds to the time and effort they have to spend buying a home. And that's what we mean by this opaqueness. And it's probably hurting liquidity. It's a very difficult housing market.
So would a way to correct that be to have some kind of public register or flush that information out and make it transparent? Would that help things?
Well, we already have the property price register, so that was a very welcome improvement in terms of transparency for the housing market. You don't need to rely on anyone to tell you what properties are selling for in the local area. You can check it yourself. So I think what we're trying to argue in this report is that we have these new online bidding platforms where the entire bidding process is online. You log in, you can see the entire bidding history. If there's a new bid, you're notified of that immediately. So it takes a lot of the uncertainty out of the process. And as well as that, I think it guards against the risks that people just waste their time looking at properties they can't ultimately afford.
I think where we need to eventually get to with these online bidding platforms, which are, I think, going to eventually take over, will be increasingly used and be the way that properties are sold. Ideally, if you see a property, you think, will you be able to afford it or not?
Why is the home buying process considered opaque in Ireland?
You can see those bids pretty quickly, so it guards against wasting your time.
So why do you think we have this market the way it is? In other words, who's blocking or putting obstacles in the way of greater transparency? Or is it just nobody is bothered to do it? Or what's the hold up in getting to the system that you'd like to see?
Look, there's a range of issues. There's conveyancing, there's the length of the sales process. One of the sort of issues in the Irish housing market is the lack of chains. So if you're in the UK, you might see four or five transactions settle on the one day. And what that means crucially is that you don't need to sell your own home before you buy another. And I think that's one of the really key issues, which is potentially holding back liquidity in the Irish housing market. Now, when it comes to asking prices being set low relative to the final transaction price, that's just a practice in the industry. I'm sure there's estate agents who feel they're doing the best for their clients. That's the best way to achieve the best price.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:01–0:47
2
What does the report say about the average property sale frequency?
0:47–2:37
3
Why is the home buying process considered opaque in Ireland?
2:37–3:32
4
How do asking prices in Ireland compare to actual sale prices?
3:32–6:40
5
What role does the property price register play in market transparency?
6:40–7:04
6
How can online bidding platforms improve the home buying experience?
7:04–7:24