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Real Estate Monthly Bulletin

Elkstone Real Estate – Monthly Update March 2018

Padraig’s Snapshot


A pronounced lack of supply is the main reason for increasing house prices in Ireland. Reports suggest we’re producing fewer houses now than we did in the 1970s and 1980s, where economic conditions were vastly different to today. 

Padraig Owens is a Real Estate professional and co-founder of Elkstone Partners


 Senior debt facility against a property

We are providing a senior debt facility against a property with an existing planning permission for office use, where the promoter will seek change of use for 30-40 residential units.

 Acquisition of a 5 acre residential site

In the coming weeks we will be closing on the acquisition of a 5 acre residential site in north county Dublin, with planning permission for 17 large units and the purchase of an infill site in north Dublin city, with multiple uses.  This follows on the back of closing four acquisitions since the end of last year.

Urban regeneration and suburban residential planning projects

We’re working on a number of urban regeneration projects in Dublin and some regional cities as well as some suburban residential planning projects, which we expect to bring to our investors in the coming weeks.


Supply constraints are a result of difficulties with funding, strategic land-banking, the planning system, increasing land and construction costs and the limited capacity of the construction sector. While we expect the supply of development land in greater Dublin to improve this year and going forward, it remains a stumbling block to greater supply of finished houses.

With a wall of capital and potential homeowners seeking to acquire housing, particularly in greater Dublin and increasingly in the regions, there is every reason to expect 2018 to be another year of double-digit growth in house prices.

The counter-argument to that trend continuing is the question of affordability. It seems inevitable that at some point, prices will reach a point at which fewer potential buyers, will have the resources to pay.

Ireland has come from a very low base and this is a comforting factor for our now perennial double-digit growth.  Portugal, Italy, Greece and Spain (PIIGS, as they were once known) suffered a similar fate to Ireland during the last Real Estate crash.  Greece, Italy and Spain continue to have the three worst unemployment rates in the EU, while both Portugal and Ireland have managed to reverse the trend.


Unemployment rate in member states of the European Union in January 2018 (seasonally adjusted)

Source: Statista 2018.  Data visualised by tableau.



The Eurostat deflated House Price Index, is an index adjusted for macroeconomic factors, attempting to show a truer reflection of actual house price growth.  Adjusted house price growth remarkably reflects unemployment statistics in the previous chart with Italy and Greece at the bottom and Portugal and Ireland towards the upper end of the table.  While this is not an argument for sustained growth at current levels, it offers some rationale. While employment growth continues at current levels, we can also expect demand to continue.

Table 1: House price index – quarterly and annual growth rates, 2017Q3 – Source: Eurostat



In a historical context, prices are still relatively low, 30% below peak prices in 2007.

Source: Residential Property Price Index (CSO)

2007 prices were fuelled by high leverage and higher discretionary spending.  It may still take some time to get back to those levels. Affordability will naturally become a more important feature in the coming years.

From our direct experience in Dublin, we continue to see a strong demand for houses in price brackets below €500,000. As we enter markets where pricing is above this level, we see a narrowing of the market. The demand is nonetheless there, but sometimes can take a little longer to move units.  We’re already seeing significant enquiries for our apartment development in Islandbridge from both owner occupiers and investors.  We modelled based on the expectation that our larger housing developments in Killiney and north Dublin will take up to 18 months to sell all units.

Overall Thoughts

Supply will increase as the factors mentioned above are gradually dealt with. Employment, affordability and to some extent interest rates will become more important factors as supply increases and the residential market normalises. Employment will be heavily dependent on our ongoing national competitiveness. Recommended further reading on the competitiveness of Ireland can be located in the following link TheGlobalCompetitivenessReport2017–2018.