Property remains a sound long term investment says IAVI President.

At the Annual General Meeting of the Irish Auctioneers and Valuers Institute (IAVI) on 22nd April, the Institute’s new President, Mr. Edward Carey FIAVI, said that in the last 38 years, Irish new home prices have increased in all but one year, prior to recent market corrections, with cumulative growth of 4,800%.¹

Mr. Carey added that second-hand prices had increased by 3,175% in 34 years with, again, just one year of negative movement prior to the corrections taking place in the market over the last twelve months.

“The current price correction is welcome and brings prices back to end 2005 levels, which are sustainable. Now, we find ourselves in a more demanding market, which others may fear, but in which I see opportunities. There is activity in the market and properties will continue to sell where people perceive value. Although prices may have decreased, demand is good, rents are stable and people are still looking to set up homes all over the country.

This is fundamentally an issue of supply and demand coupled with the availability of finance and we are in no doubt that the supply side remains positive with continued immigration and good employment figures.”

Commenting on the IAVI’s recent role in the Revenue Commissioners’ efforts to access member files in order to identify Irish buyers of foreign property, Mr Carey said that “the IAVI was concerned that its members may be exposed to civil action for handing over confidential information, which the Revenue Commissioners were not legally entitled to receive in the manner sought. He said that, “banks have suffered for relying on similar assurances from Revenue in respect of its powers. The IAVI encourages tax compliance but will always insist that the State, in seeking information, must itself act legally”.

While recognising the relief given to hard-pressed homebuyers by way of stamp duty adjustments in last year’s Budget, Mr. Carey urged the incoming Minister of Finance to finish the job and adjust transfer taxes, which represent a major impediment to mobility and the efficient use of property stock.

“The whole economy benefits from a buoyant but sustainable property market and there is a need to retain Irish investment at home and to encourage inward investment. The current commercial property stamp duty rate of nine per cent merely drives investment abroad at a time when our economy could benefit from internal investment.”²

Mr Carey spoke about the changed business climate in which IAVI members operate and said that the time has come to sort out the trained professionals, for whom property is a genuine career, from those who perceived the boom market as a way to make a fast buck.

He called on those who manage estate agencies to “ensure that staff are imbued with a sense of customer service and that agents need to recover the win-win philosophy that brought success before the boom years”.

In addition, Mr. Carey expressed relief that the Bill to establish the National Property Services Regulatory Authority is included in the legislation to be addressed by the Oireachtas in the current Dáil session.

“The IAVI has actively sought the establishment of such an authority since 1931, when we proposed in a Private Member’s Bill that (IAVI) would merge into a State Authority with mandatory education and registration for all agents. It seems that, 77 years later, State thinking has caught up with that IAVI foresight and we welcome this move to established such an Authority.”

“Although IAVI members are professionally qualified, are required to engage with Continuing Professional Development, hold licences from the courts, produce tax clearance certificates and maintain Professional Indemnity Insurance, we have had to compete with those who simply put a sign up outside a house and call themselves auctioneers.”

Mr. Carey explained the Institute does not seek close shop but it feels that the public deserves a trained, professional service.

“Those who offer advice on property should have a proven knowledge and competence in the subjects of valuation methodologies, all relevant aspects of law, town planning, building construction, land use economics and the other diverse topics put into everyday effect by IAVI practitioners. We want anyone who offers an estate agency service, of whatever nature, without a licence, to be detected and prosecuted.”

The IAVI is the only Irish property body that has verified the CPD participation of all of its members, with a 97% compliance rate. Recently, around 50 suspensions were made. Unless those suspended pay substantial fines and verify their compliance with the IAVI’s mandatory CPD requirement within a three-month period their membership will be terminated.

In summing up, Mr Carey congratulated the work of the outgoing President Mr Robert Ganly FIAVI and board member Mr John Dawson FIAVI and he welcomed Limerick-based Mr Kersten Mehl FIAVI to the Board.

Ends

For further information please contact:
Carina O’Neill, Bracken PR on 01-677 3277 or 087-222 8124
Brendan Bracken, Bracken PR on 01-677 3277 or 086-258 6628


Note to editors

1. Average house price statistics have been available in the Republic of Ireland since 1970 for new homes and 1974 for second hand homes from Department of the Environment and, since 1996, from Permanent TSB / ESRI. That covers a 38 year period for new homes and a 34 year period for second hand homes. What do these statistics tell us about the national experience of rises and falls in house prices?

Department of the Environment figures show that the average price of a new home in Ireland increased from the equivalent of just over €6,500 in 1970 to about €330,000 in the Q2 2007, (a 4,800% increase), before falling back to €319,000 (a 3.8% reduction) in Q3 2007, the latest quarter available from DoE.

Second hand homes, rose from just under €12,000 in 1974 to €387,000 (a 3,175% increase) in Q2 2007, before falling back to €374,500 (a 3.25% reduction) in Q3 2007.

Prior to the recent market slowdown, year-on-year annual changes show that homes reduced in just one of the previous 38 years and that was in 1987 compared to 1986 when the reduction was 0.22% for new homes and 1.6% for second hand homes. Prior to the recent reduction, with this single exception, new home values increased in every other year.

The latest Permanent TSB/ESRI figures show that recent declines in value commenced nationally in March 2007, with a total reduction in value of 7.3% recorded for 2007 compared to 2006.

It also shows the average house price in the country in February 2008 at roughly the same level as in March / April 2006. To quote Permanent TSB: “The drop in national growth brings house prices back to March 2006 levels”.


2. According to a recent Jones Lang LaSalle report, the market for commercial property investment in Ireland was worth €1.7 billion in 2007. In the same year, Irish investors spent over €10 billion on foreign property investment, with over 50% of this going to the United Kingdom, followed in popularity by Germany (14%), France (10%) and the United States (9%).

The scale of foreign investment is staggering, with 23% of all deals on behalf of Irish buyers being over €120 million, while 35% of Irish acquisitions in foreign office markets had a value between €30 million and €60 million.

36% of Irish deals in the UK and 38% of those in the United States were in the €10 million to €30 million price-bracket.