Impact of Covid-19 on the Dublin residential market in Q2

Covid-19 had a profound impact on the Dublin property market in Q2. While business quickly pivoted to be conducted virtually, market activity was a fraction of its pre-COVID level as a result of in-person showing restrictions. As lockdown eased and activity returned to the market, strong activity was supported by pent-up demand. Longer-term, for-sale market conditions will depend on the wider economic recovery and the containment of COVID-19. Sales activity fell sharply this spring and we experienced a 60% fall through rate. While dramatic in magnitude, the drops were the result of lockdown rather than serious structural shifts in demand.

Some of these buyers have now re-engaged with us and in some cases, we had to re-negotiate with buyers. Listed inventory was also affected by COVID-19. In the second quarter 2020, our active listings fell by 90% compared to Q1. The decline in properties listed for sale that started in March accelerated in April and May as many properties were withdrawn from the market. Because of a drop in sales at the higher end of the market, median and average price declined significantly when compared to Q2 2019. When lockdown measures were lifted in June, we noticed an immediate increase in activity and there was obvious pent-up demand with a lack of supply. In June, our average selling price was 3.48% above asking price with strong demand on all property types and fast selling times.

In the rental market, there was a 50% increase in the supply of rentals due to the short-term rental market collapsing. This combined with reduced demand created a tenant’s market for the first time in years. Rents in Q2 fell 7% and void periods trebled to six weeks but there are signs now that the market has stabilised. Technology played a key role in our rental transactions which were virtually the same as Q2 2019. In many cases we let properties using VR walkthrough tours only and did not meet the tenants in person with leases digitally signed. Remote rentals will now be a feature of the market going forward.

In our managed portfolio we temporarily re-adjusted 15% of our managed tenancies with an average reduction of 20%. Most of these abatements have now ended. In April, large technology companies like Facebook and Google advised their employees they could work from home for the rest of the year. This directly caused 7% of our managed tenancies to end prematurely. Most of these tenants were from continental Europe such as France, Italy, and Spain. All of these tenants intend to return in the new year.

In my opinion, the real test for the market will come in the Autumn when typically, there is a pickup in supply. The question is, will the demand be there? Economic data and mortgage lending will really pay a huge role. Right now, we are meeting the needs of really motivated buyers.