Sheep's Head Property, Bantry Property Still holding its own
There are conflicting reports and ideas of what is happening to the West Cork property market and to the Irish property market in general.
The property market is currently in a deep state of procrastination as a result of the stamp duty scenario. With virtually all of the significant parties now offering an overhaul of the stamp duty system, the big question is “How much?” rather than “When?”.
The most popular option seems to be the elimination of stamp duty for first-time buyers and there’s a good chance that this alone will be the only tinkering measure to be carried out by the next government. If that is to be the case, then it is likely to create a significant and welcome boost to the property business, as a whole army of first-time buyers take their fingers off the “pause” button and leap into action en masse.
What is likely to emerge from that scenario, however, is that the prices of new homes will increase in reaction to the increased demand (there’s really no getting away from the simple laws of supply and demand). When the government increased the stamp duty threshold from 190,000€ to 317,500€ a couple of years ago, we saw a similar phenomenon. It’s something we’ve noticed in the West Cork property scene as well – i.e. the huge growth has been at the lower end of the market. Interest rates have as much to do with this as well. Once a property goes above a certain price, then it is no longer feasible as an option to buy and let out, unless you’re someone with additional cash who is simply using their property purchase as a long-term pension fund/ savings plan.
What would really be of assistance is a complete overhaul to the stamp duty system, and a more logical levelling of the tax bands. At the moment, when you change from one tax band to the other, the rate applies to the entire price of the property. If the increase were to apply only to the difference between the lower and higher tax band, then you’d get much more fluidity in the market and it would become instantly much more affordable for people who are thinking of trading up (or down) to actually do so. This would stimulate the market across the board and increases in price would, accordingly, be spread across all price ranges.
Sounds like a nice set-up, doesn’t it? But it is unlikely. Logic defies governments, so that’s not likely to change this time around. All political parties are avoiding the simple logic that we need to actually increase taxes in order to provide better services. Everyone complains about our health service, but the fact is that it is underfunded compared to exemplary set-ups like in France or Germany. A poll published in last Friday’s Irish Times showed that 83% of those polled were not in favour of an increase in income tax to provide better services. So, one can hardly blame the political parties for giving the public what they want.
Anyway, the more pertinent issue for us here is that of property and, in particular, West Cork property. Although the whole property business both in Ireland and in West Cork is in definitely in the doldrums, demand for property on the Sheep’s Head Peninsula seems to be going from strength to strength.
