The Irish property market collapsed spectacularly when most of Europe went into meltdown. Ireland was one of the “I”s in “PIGS” – Portugal, Ireland, Iceland, Italy, Greece and Spain. That’s largely thanks to feckless lending by the big banks, which needless to say were bailed out, but until now have been oddly reluctant to lend to anyone wanting to borrow. Anyway, bottom fishers have kept an eagle eye on the Irish housing market and now, with distressed sales about to begin in earnest, the real bargain hunters are asking: is it time to buy in Dublin again?
Hong Kong people are surprisingly keen investors in Irish property, helped by thousands of them having offspring enrolled at Ireland’s universities. As in the UK, Hong Kong parents often buy a place for their kids in the town where they are studying, rather than rent.
For all you property buffs glued to the Europe market, Ireland is a good economic barometer. Bring small, with total population of about five million, north and south, it crashes faster, but also tends to bounce back quicker than its less nimble neighbours. Ireland is especially keen to distance itself from the plight of the property markets of Spain, Greece, and Portugal which are also associated with unacceptably high unemployment levels.
One drawback for the overseas investor used to be the difficulty of getting good data, but the introduction of the new Irish "Property Price Register" in 2012 allows transaction prices to be compared against asking prices, a big help. Paul Burke, Hong Kong-based Ireland property consultant, uses the level of transaction as one basic indicator. Right now, he says that's positive, but it’s still a long way from the heady days of the Celtic Tiger.
But the good news, he says, is that Ireland’s residential prices have begun to rise in selective districts of Dublin - at last.
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Last time I went to Dublin, just a few weeks ago, I noticed the widening gap in residential prices between the capital Dublin and the rest of the country. Burke agrees, adding that’s because the new crop of first-time buyers and investors want prime. They learnt their lesson during the crash – prime bounces back fastest. So it’s Dublin or nothing. And after the mad boom when people lived miles out of town, Irish nationals are no longer up for two-hour commutes. And overseas Irish buyers and foreigners can afford to be picky. They are seeking the prime residential areas and forgoing a marginally higher yield offered in less salubrious districts of Dublin. Recently local lenders have become more active, with the ESB and Permanent TST now back in the mortgage market, which is helping local interest.
Burke suggests focussing on value-added locations within Dublin, with south Dublin residential offering the best return prospects, especially the key Dublin 2,4, 6 and 8 areas, although stock choice will be more limited in these popular districts. “Expect continued increase in capital values and rentals for properties within easy commuting distance of the business CBD, IFC and likes of Googletown,” he believes.
The stock of Dublin rental properties is at its lowest since 2008 (according to "Daft.ie". Remember also, he says, that Dublin residential prices rose 318% between 1996-2006 and have halved since then. Average residential yields in Dublin are about 6-7.4%, among the best in Europe.
More nitty-gritty on the Irish property market tomorrow.