Property in Ireland Cheaper and More Attractive
Published on 23 November 2007
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The days of Ireland’s legendary property boom appear to be over as a number of factors combine to depress the Irish real estate market. As buy-in numbers continue to drop however, savvy investors are seeing the potential for the future. This is especially so for those who are looking at buy-to-let strategies catering to the holidaymaking market.
Irish billionaire Denis O’Brien has been quoted by Bloomberg as saying he anticipates a drop as much as 10% in housing prices in Ireland. Prices in some parts of the country have already dipped by 10% and sales are slowing. The market is being affected by a number of factors including the recent rise in mortgage interest rates. In some cases, buyers are eating double costs in regard to mortgage interest and as a result property in Ireland is now cheaper and more attractive!
Still, O’Brien does remain optimistic about the future. In spite of the slump at the present, he expects Ireland will enjoy a “softish landing.” With this in mind he says he is not “bearish on Ireland.”
So, what does this mean for property investors?
The pricing drop and further future pricing decreases mean buyers here are likely to see more affordable rates in the near future. It is important to remember however, that Ireland has rather high housing costs at the moment. Even with a 10% pricing drop, the overall average prices are likely to be anything but “cheap.” It is feasible to find bargains out there, however.
Prices for property in Ireland in the Dublin area are still very high by other foreign investment standards where one-bedroom flats run for under GBP 50,000. In Ireland, this is simply not the case. A one-bedroom flat in some areas of Dublin can run as high as EUR 350,000. In the Cork region, the same amount of money can fetch a three-bedroom detached home. It all depends on the community and the willingness of the buyer to really shop around.
Whilst investors in Ireland might not want to anticipate high flip returns at the present, the potential for holidaymaking income is still quite strong. Ireland’s already strong tourism market is anticipated to keep growing. Worth an estimated EUR 26 billion, holidaymaking is very big business in Ireland.
Investing here does present a few challenges. With mortgage rates running through the roof, buyers might want to bring their own financing. Making sure rental returns are feasible is also a very wise idea as investors are not going to see buy-and-flip potential that is high on the growth end for at least a little while.
Ireland was once a land of incredible growth potential. The Emerald Isle has now cooled a bit, but that doesn’t mean it is out of the game. With strong tourism attraction remaining intact, investors here might just need to adopt new strategies to enjoy returns.
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