By Michelle Crean
February saw over €1.7m in sales transactions for residential properties during the month of February.
According to the latest monthly figures from the Property Price Register, 10 properties were sold in the Killarney area and surrounds last month – with the highest selling for €275,000.
In total 39 properties were sold in Kerry between February and March. Here’s a breakdown of where and how much they sold for.
A home in 58 Countess Grove, sold for the highest value at €275,000, while 8 Castlerosse Cottages sold for €245,000. Grace Haven, Knockanes, Headford also sold for €245,000, while 11 Glenview Drive went for €222,000, 6 Broker House in Pawn Office Lane on High St sold for €134,000, and a home in Pinewood Estate sold for €190,000. Others sold include Chapel Court, Chapel Place for €120,000, a property at Two Mile School for €110,000, while €105,000 was paid for 2 St Mary’s Terrace on St Mary’s Rd, and the lowest sale was at Rossdohan, Tahilla which came in at €76,500.
What does the summer have in store for markets?
By Michael O’Connor
Markets in May
US equities ended in May on a modest note as inflation concerns dominated the headlines. The S&P 500 secured its fourth consecutive month of positive returns with a gain of 0.6%.
Value-oriented strategies led the way with both Growth and Momentum, last year’s big winners, declining. Most factors posted positive gains, with financial and industrial leading the way as expected. Surprising to many, the Tech sector has now underperformed the S&P 500 Index for the past year.
Confidence continued to grow as economies reopened. Jobless claims in the US have fallen to a new pandemic low. Travel continues to rebound, with 1.9 million US travellers taking to the skies on Saturday, May 29, marking the busiest weekend of air travel since the pandemic began. Most importantly, successful vaccine rollouts continued in May, with the UK recording its first day of zero daily COVID deaths since the pandemic began.
What lies ahead
Despite multiple reasons for economic optimism, the expected inflation that comes with a global reopening is likely to result in some short-term market fragility over the coming months.
The most recent inflation figures saw YOY consumer prices increase 4.2% in April, the biggest 12-month increase since September 2008, the height of the financial crisis. Core PCE climbed to an annual figure of 3.1% in April, far exceeding the Fed’s nominal target of 2%.
Inflation is likely to continue this run higher over the coming months. Rising commodity prices, a falling dollar, and wage growth resulting from severe labour shortages are likely to result in inflation figures of between 3% to 4% over the summer.
While short-term inflation moves suggest a continuation of the rotation into value stocks, it’s important to note that the current inflationary environment is unlikely to persist over the longer term. The combination of transient inflation drivers and long-term deflationary factors should see inflation fall back to around 2.5% later this year.
So what does this mean for your portfolio?
Now is an opportune time to recalibrate your portfolios to avoid obvious interest rate risks. In my view it is a time to be underweight with long-duration assets, whether they be 20 Year Treasuries or disruptive tech stocks with no free-cash-flow. High volatility and small-caps and lower quality names should be avoided. Companies with superior cash-flow generation will continue to anchor portfolios as the current gusts of inflation takes hold.
I remain positive towards equities, with a bias to cyclical stocks and “value” names as earnings remain solid and monetary stimulus remains supportive.
With all that said, don’t blindly presume that all stocks set to benefit from an economic reopening will be guaranteed “value” winners. Strong free-cash-flow is the focal point here.
Take booking.com as an example. At first glance, nations full of holiday-deprived travel enthusiasts would suggest that the near-term future is bright for the travel conglomerate. However, the market already appears to have jumped the gun on this one. ‘Booking’s’ current valuation is now above its pre-pandemic levels despite the company’s 2021 revenue projections being roughly half the revenue earned in 2019. Now I’m not saying that booking.com is a bad long-term investment, but as a forward-looking machine, the stock market has already priced in much of the expected near-term optimism, and then some, for these better-known reopening stocks.
Search for strong free-cash-flow, not just a compelling storyline.
For more investment insights, visit www.theislandinvestor.com.
There’s a lack of property supply to satisfy demand
By Ted Healy of DNG TED HEALY
Estate Agents the length and breath of the country are this week reporting very strong demand for appointments for physical viewings from prospective buyers keen to view properties first hand.
The opening of retail and personal services by appointment last week has given a much-needed boost to businesses across all sectors, including property and construction.
WORK FROM HOME
While the COVID-19 pandemic has prompted many Irish living abroad to return home, one of the emerging trends is the move by people out of cities to smaller towns and villages due to the ability to work from home. Remote working, a temporary measure implemented during lockdowns, is here to stay.
We are now seeing those people who flocked to our main urban centres for employment, reassess life and work life balance. The pandemic has thought us to appreciate other things and as such many young professionals are now considering relocating to the regions.
The ‘work from home’ phenomenon has made it possible to conduct business from the remotest parts of Ireland provided good connectivity is available. This is a trend being experienced in the Killarney market.
Since physical viewings returned last week a high number of people looking to return to Killarney to work from home have viewed properties. We noticed the trend developing during lockdowns when we were able to facilitate virtual viewings. This trend has continued since physical viewings were again permitted last week. In the past week alone, we have sold three properties to buyers returning to Killarney to work from home.
LACK OF SUPPLY
The burning issue currently is a lack of supply of properties to satisfy the demand. With suppressed supply of both new and second-hand homes comes increased demand. Killarney is currently experiencing a severe shortage of available properties for sale.
We have a list of ready to go purchasers seeking to buy homes in the Killarney area at present and we would be delighted to speak to anyone interested in listing their property for sale.
Have motor insurance rates reduced?
By John Healy of Healy Insurances
The cost of motor insurance in Ireland is a well-documented topic over the past number of years. Have the increases plateaued and are reductions on the horizon? Firstly, we need to know how we got here.
The average car insurance premium in 2013 was €435. Now compare this to 2019 when it hit an average of €706.
There are a myriad of reasons for the rate increases including higher claims costs. In 2014 the limit for personal injury awards at circuit court level was increased from €38,000 to €60,000. This level of claims inflation was felt across the insurance market and was immediate. This increase did not grab national headlines and was hardly commented on outside the insurance industry at the time.
In 2015 the average circuit court award increased by 21.2% following a 13.5% increase in 2014. The upturn in the economy at this juncture led to increased traffic and consequently higher levels of accidents and claims. The average whiplash claim in Ireland stood at €15,000 compared to €5,000 in the United Kingdom.
We should recall that the insurance industry witnessed a number of insurer failures in the past number of years including Setanta, Enterprise and of course the collapse of Quinn Insurance for which consumers are still paying a 2% levy every year. Some of these failures no doubt resulted from unsustainable pricing when the claims environment was getting considerably more difficult. The EU enacted Solvency II legislation in 2016, which required insurers to hold increased capital levels to protect against the risk of insolvency. It is also likely that it hastened the withdrawal of smaller niche insurers from the Irish market.
Insurance has been a hot potato for Government for many years. In late 2019 the Government enacted legislation to increase the timeframe for issue of renewal notices from 15 to 20 days. There was also a multitude of extra information to be included. Any consumer who has purchased motor insurance will have noticed the massive increase in the documentation over the past year. Does this lead to lower premiums? Even an EU former chair of a regulatory institution, Gabriel Bernardino, has recently acknowledged the problem in saying “too much information kills information” and that consumers are not reading documentation received.
The insurance market experiences cycles of expansion and contraction. An expansion is referred to as a soft market and will result in reduced premiums, more competition, and increased capacity from insurers to write business and a scramble for market share, sometimes below profitable levels. A contraction is called a hard market and typically results in higher premiums, less completion and capacity to write business, and withdrawal of insurers from sectors. While the profits of motor insurers can be in the millions it is perhaps more reflective to note that their combined operating ratio (underwriting margin in other words) is often at 5% or lower.
Is Ireland entering a soft market for motor insurance premiums?
According to Insurance Ireland, a representative body, there have been reductions of 9% in 2019 with a further 6.5% in 2020. According to the Central Bank, the average premium at the end of 2020 was €653. For comparison purposes, the average comprehensive car insurance in the UK was €882 in the last quarter of 2020 and in France, the average cost is between €700 and €900 depending on regions.
The new personal injury guidelines will have a positive impact on premiums but this will take time to wash through the legal system. COVID-19 has certainly meant much reduced traffic on the roads and this should feed into lower claims and thus lower costs.
At Healy Insurances, we surveyed over 120 of our customers over the month of May and found that the average year on year car insurance reduction was 15% from 2020 to 2021.
The current reductions on rates are likely due to the benign claims environment over the past year rather than the changes to the personal injury guidelines.
The question is; will reductions continue as the economy continues to reopen and emerge from the pandemic?
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