Turbulent turn of century property market

In the third of a series of reflection on land price changes in decades, Garry Best looks back twenty years to the turbulent 2000-2010.
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Looking back 20 years ago at the start of a new century and, knowing now what a rollercoaster ride some property owners experienced and the subsequent impact on the entire banking world and beyond, one can only wonder ..if there had been more signs of the impending crash in 2007,would it have made any difference to the level of destruction throughout the world’s economy?

Or were we - at least in the UK - part of a cyclical economic wave partially driven by human greed and the international money markets?

AGRICULTURAL LAND

Farmland started the decade at around £6,000-£7,000/acre and by 2004 had risen to £10,000-£11,000/acre. Within another three years, it had reached an average of £15,000/acre although there were one off type examples in the property boom of e.g. 14 acres (Newry area) achieving £57,000/acre and similarly in Rostrevor some 6.25 acres fetching £60,000/acre – both of which display the carefree spending which prevailed at that time as well as the hunger for land as a long term investment.

The Burrenwood Estate outside Castlewellan, a landholding of around 52 acres of primarily woodland, changed hands in September 2007 at around £20,000/acre.

Towards the end of the decade – between 2007/2010 – saw the first reduction in farmland value from since the late 1970s, falling back to its 2004 level of around £10,000-£11,000/acre.

BUILDING SITES

Building sites between 2000 and 2002, sites were achieving £35,000-£55,000. Within three years to early 2005, these had risen to £80,000-£90,000. Looking at the records, by August 2005, the majority of rural sites in the South Down and County Armagh region were achieving in excess of £100,000.

By 2007, they had risen further to an average of £220,000 (0.5-1 acre) and then the bubble burst – in 2009 dropping back to an average of £100,000 – such was the variance in demand towards the end of that decade for both sellers and buyers of individual building sites.

I recall one particular Auction in October 2006 when a ¾ acre elevated site on Upper Fathom Road attracted considerable interest. Usually with one-off sites in the countryside, the demand is from either local families who have a connection within the locality or someone wanting more space and moving out of the town, perhaps attracted by the views or proximity to work. However between 2004 and 2007 these regular site purchasers were finding it difficult to compete with a new category of buyer – “the small builder”.

Due to the rising market and available bank finance, most builders could achieve a profit margin by acquiring a rural site, building a one-off house design and selling on the open market at least up until the second or third quarter in 2007.

The available finance and rising market were the key influences of the significant interest in this Upper Fathom Road site. A combination of would-be owner occupiers and small builders filled our Auction room one day in October 2006 when we achieved a high of £339,000 for a non-sea view rural site, in which case the “small builder” outbid the future would be owner-occupier.

The reason I specify ‘non-sea view’ site was during the previous month a shorefront site Moyne between Warrenpoint and Rostrevor extending to approximately 0.64 acres and with a guide price of £1,350,000 fetched £1,850,000. Planning Consent for a replacement dwelling was granted and the existing dwelling demolished to make way for an impressive modern residence.

RESIDENTIAL DEVELOPMENT LAND

Development land was probably the headline maker during this decade of extraordinary rises and falls in property values.

From a relatively quiet start in around 2000 of between £200,000-£250,000/acre in the urban areas (this figure was as low as £30,000-£35,000/acre six years previously) by early 2005, was show this rise to an average of £350,000-£400,000/acre and almost doubling by the end of 2005 to £750,000/acre.

The fever for acquisition of any category of development land (zoned or with Planning Consent approval) was reaching extraordinary levels.

Vendors who had sold during this rising tide, sometimes re-invested into other property types (housing, sites or farm land) and continued to fuel the fire of dangerously rising property prices.

During 2006, over 12 transactions, less than 40 acres of zoned land or land with Planning Consent for Residential Development changed hands, both in Newry and in the surrounding Villages, for an average of £920,000 per acre (£1,110,000/acre in urban areas versus £775,000/acre in more rural locations). Fourteen years later, the current average is probably less than one third of that 2006 high.

The often used barometer of the price comparison of three bedroom semi-detached housing similarly had its ups and downs during the first decade of the new century. At the start of the decade, the average was around £75,000 and by 2005, this had nearly doubled to £138,000, within two years this average rose to £210,000, having trebled in seven years.

Whilst many of the UK property regions are back to prices similar to 2007 levels, Northern Ireland in some respects experienced some extreme highs as regards property prices and 13 years on from the peak, are not back to those levels, but thankfully in most localities the general property market has been relatively stable during the past 12 months.

Activity levels, following the first lockdown were positive for most selling agents, with the unknown impact of the current lockdown still difficult to predict, but at least not likely to compare with the 2007-2009 crash in prices.

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