Head across the Irish Sea for bargain houses

Prices are at an all-time low in Ireland, but only the brave can ignore the euro's plight. Chiara Cavaglieri reports

Ireland may be watching its young graduates leave their homes behind in search of work, but many Britons are peering across the Irish Sea looking for a property bargain.

With prices at an all-time low, investors hope that the market has hit the floor and want to snap up cheap homes while they can.

Interest on the online property portal Rightmove Overseas in Irish property began to rise when the debt crisis hit the headlines, but now there are 39,000 searches for Irish property every month, making it the 11th most popular country on the site.

"Property prices in Ireland are at their lowest since 2003, so now is a great time to think about putting money into a renovation project or a newly built property before prices start to rise," says Tom Whale from Rightmove Overseas.

House prices in Ireland have been in a slump for four years and fell by 14.3 per cent in the year to September, according to the Central Statistics Office (CSO), based in Cork.

From their peak in 2007, average house prices are down by 43 per cent. Owners of flats in Dublin have been hit hardest, seeing a 4.8 per cent drop in September prices and a 59 per cent collapse from the highs seen during the Celtic Tiger years.

Prices are keen, but how do you get your hands on an Irish bargain?

"The first thing to say is that the Irish system is almost identical to the English system. Contract law is basically the same so if people have bought property in England it is really the same process," says Ronan O'Driscoll from estate agent Savills Ireland.

"What is different, however, is the extent of the collapse in value, which depending on the category of property, is down about 50 per cent but could be down by as much as 70 per cent from the peak. The official stats say prices have fallen on average by 43 per cent but that is understating the reality."

Mr O'Driscoll says that in a prime Dublin location such as Ballsbridge in the city centre, a typical two-bedroom flat in a quality development costs about €300,000 (£256,000). The peak value for this property was €700,000. In Docklands Dublin, also in the city centre, a similar flat might cost only €200,000, a 60 per cent reduction from its €500,000 peak price tag. Outside of Dublin he points to even bigger bargains to be had with three-bedroom semi-detached houses in a Midlands area such as Mullingar going for as little as €90,000 down from €250,000.

As many Irish homeowners struggle with arrears, banks will be unloading an increasing number of repossessed properties at auction. In April, Ireland held the first multiple-lot auction through auctioneers Allsop Space, and its success paved the way for two even bigger lots this year and another to follow at the end of this month. Residential lots likely to entice overseas buyers include a detached four-bedroom house in Shercock, County Cavan with a reserve price of €50,000.

"We have eight city apartments in Dublin city centre being sold with tenants and the reserve prices – one beds for €92,500 and two beds for €135,000 – are reflecting a 12 per cent rental yield," says Robert Hoban, director of Allsop Space.

Most properties in these three auctions exceeded their reserve prices, but in Allsop's September auction, a ground floor two-bed unit at Shelbourne Park in Dublin had a reserve of €130,000 and went to a buyer from England for exactly that.

Rental yields are by no means guaranteed, however, and there is a risk that rents are artificially inflated as a leftover from the boom time and may well falter at some point. There may be some cheap properties in the more rural areas and in the greater Dublin area but this is because those places were overdeveloped as people were forced to move further away when prices rocketed to unaffordable levels. Those values have now been damaged particularly badly and are attractive but these homes could prove too difficult to rent out today. There are thousands of empty flats clustered around the outer M50 motorway, but in the city centre, where tenants want to live, there is far greater rental potential.

"If people from the UK are considering investing in the Irish market they must be careful where they choose to buy," says Mr O'Driscoll. "Keep in mind the general neighbourhood, and transport links are critical. The nearer to the city centre the better because they don't have the oversupply."

Whether you pick a hot spot or not, property investment is still all about timing. International buyers with an interest in Ireland may be won over by the idea of buying an idyllic seaside property in Cork or a trendy new-build in Dublin on the cheap but there are some significant risks.

First of all, investing in property is an expensive game with stamp duty, surveys and legal fees to factor in so it isn't to be entered into lightly. And because property is so illiquid it should be treated as a long-term investment. The market could be in the doldrums for some time and Irish banks are in no position to lend. Cash buyers looking for a quick sale may find they have no one able to buy.

Above all, British buyers must be aware of the danger of investing in euros. Not only do they have to consider the exchange rate when buying and converting any rental income but also, because if the Irish bail out of the euro and their currency devalues, it could be devastating for anyone holding euro-based investments.

"Investing now presents real risks and is only for the very brave," says Simon Webster from independent financial adviser (IFA) Facts & Figures. "Anyone with any doubt should talk to someone who bought in Spain five years ago and now cannot sell for love nor money – even at a huge discount. With the increasing risk of a complete or partial unwinding of the euro (including Ireland's possible exit and subsequent devaluation of its own currency) I would look for property bargains outside the eurozone."

Expert View

Tom Whale, Rightmove Overseas

"The interest in Irish property from the UK has increased dramatically over the past 12 months, as UK buyers realise that there is a surplus of properties at low prices all over Ireland. UK buyers and investors are purchasing with future price increases in mind, as well as looking to rent out the property to short-term holidaymakers and long-term local residents. With local Irish buyers finding it increasingly difficult to get on to the property ladder, rental yields can be very attractive and there is the potential for a good return on your initial investment."

Suggested Topics
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Bruce, left, with Cream bandmates Ginger Rogers, centre, and Eric Clapton in 1967
people
PROMOTED VIDEO
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
News
i100
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
arts + entsSam Smith’s Mobo triumph is just the latest example of a trend
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Data Analyst/Planning and Performance – Surrey – Up to £35k

    £30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker