Along with some sound, productive work between the politicians and bankers, the property market in Ireland needs some good fortune rather than the ‘luck of the Irish’.
Much of Ireland is still within the throes of a recessive economy that sees properties standing vacant simply unable to find buyers, or property prices falling by as much as 20% in the span of a year (2012). Even now, the total number of properties up for sale is at its lowest in at least five years.
But, if you hold your breath and listen carefully, you’ll hear a whisper of optimism emerging from a few Dublin streets. It’s not recovery, but perhaps an inkling of stability. Prices in some parts of Dublin rose in 2012 (instead of falling dramatically as in 2011).
Where did it go wrong?
Denise Casey, Irish national and partner in the real-estate firm APSS, believes that during the most recent property boom in Ireland, beginning in the late 1990s through to the early 2000s, businesses and property investors were drawn to Ireland for its market growth and well-educated work force. Additionally, Dublin, as London, is a strategic hub in the British Isles and a gateway to Europe. ‘But it’s the skills and education of the populace that brought in companies during the boom,’ says Casey.
The local builders, with the blessing of the local governments, overcompensated by building to a point that the supply well over matched the demand. And then they built some more. And some more. The builders were getting richer, as were the bankers and even the politicians. As for the people of Ireland, however…
‘Yes there was population growth. And yes the Irish nationals abroad were moving back home to take advantage of the growing economy and job market. But the amount of new homes being built made absolutely no sense in terms of supply and demand.’ Even still, Casey continues, ‘extremely greedy politicians throughout the country handed out planning permission left, right and centre. So developers built more and more homes, and not just in and around Dublin, but in rural areas where there would never be a demand. The politicians didn’t put a stop to it. They didn’t want it to end.’
Incentives were also offered to foreigners to come and invest in Ireland, which proceeded to push the greed even further. By the time the recession began in the United States, Ireland was already up to its eyeballs in a property bubble, and ‘even if the recession from the US hadn’t spread to Europe, Ireland’s market would have crashed on its own,’ says Casey.
Casey is certain that Ireland’s was a case of absolute oversupply of inventory, and the politicians who offered the planning permissions, as well as the bankers who gave out loans, should have stopped. With no regulations and no advisors, first-time investors, for example, were pulled in up over their heads, receiving 100+% loans. Now they’re in debt.
It will take time
In 2012 in the main centres of Ireland, such as Cork and Dublin, prices have bottomed out. That’s the first step on the way to a market recovery. The entire economy of Ireland is suffering, however, and with a poor job market, there’s something of an exodus going on at the moment. The Irish are leaving for the greener pastures of Australia, New Zealand and Canada. In fact, during the 12-month period beginning in April of 2012, nearly 80,000 people left.
Casey believes that it’s still possible to consider Ireland as a property investment, but that it comes down to buying in the right locations. ‘Good deals are to be found,’ she explains, ‘provided you’re prepared to hold for the long term.’
The Property Services Regulatory Authority says the average price of a house in Ireland is currently at US$112,400 (£137,000).
Numbeo gauges the per-square-metre, average price of renting a 3 bedroom apartment in Dublin:
In the city centre: US$2,422 (£1,500)
Outside the city centre: US$1,937 (£1,200)