Dubliners come home to find boom prices in Cool Hibernia

Returning Irish emigrants have had their hopes of buying a house dashed by property speculation. Alan Murdoch and Jack O'Sullivan report

PAUL and Mary Flynn abandoned London just as Cool Britannia arrived. With the birth of twins, in addition to their two other children, theycould not afford a decent house with adequate schools in a good area. Promotion beckoned Mr Flynn, a hospital doctor, back to Ireland. After all, was not Dublin always the dream place to buy a fine, cheap house with plenty of land?

The Flynns have had a terrible shock. They landed in the middle of Cool Hibernia, a booming economy which makes Cool Britannia look sluggish. "We ended up having to move into a wreck which was virtually uninhabitable," said Mrs Flynn, 39, still reeling in her four- bedroom Fifties semi from the shock of managing four children with a cement mixer in the kitchen.

For three months last autumn, her husband camped in the house at night with two of the older children, because it could not be secured properly. "Some nights there was no running water or electricity," she added. For the wreck, they paid pounds IR225,000 (pounds 201,000).

But most people would congratulate them on securing their wreck in Killiney, on Dublin's south side near the sea. "It's gone up pounds 700 a week since we bought it last summer," said Mrs Flynn. "A similar one down the road just went for pounds IR385,000."

Such price rises are a sign of a remarkable boom. Last year, gross domestic product grew by more than 10 per cent. Now, as the Republic prepares for European economic and monetary union, its key interest rate of 6.75 per cent must almost halve by the end of the year, to match German rates. With inflation still below 3 per cent and big investment from international computer firms capitalising on a well-educated population, there seems no end to the country's massive growth.

So, where 10 years ago abandoned Victorian piles littered the capital, today dozens of new hotels and an estimated pounds 500m worth of new apartment blocks have appeared, boosted by tax incentives for developers and purchasers.

In big towns, traffic gridlock has gripped the centres. Regiments of gleaming new hatchbacks driven by smart young women are prominent amongcommuters, a contrast with the climate of permanent recession three decades ago when many women were forced to leave their jobs when they married.

"The buzz is incredible," said Mark Cassin, a 34-year-old Dubliner, who runs DMA, a directing marketing agency. Last night, he was heading out of town. "We'll be water-skiing on the Shannon down in Tipperary," he explained, pointing out just how much the Irish midlands are turning into a yuppie playground.

"Dublin's such an exciting city to live in," he said. "The number of French, Germans and Italians you see moving in is amazing. So many pretty girls. When my mother comes up from Waterford, she's amazed how smartly dressed everyone is. You can't walk down the street without seeing a star: a Spice girl one day, Bono another."

The landmarks remain and the old pubs - Toner's, Doheny and Nesbit's and O'Donohue's in Baggot Street - are as popular as ever. But walk across the Ha'penny Bridge and you'll find the new Pravda bar-restaurant with its neat Forties lights and plain woodwork offering Stalinist chic. Such is the popularity of some pubs that queues form several evenings a week by 9pm.

In a country that has enjoyed a long love-affair with America, the new buzz is determinedly European. The really chic gather in continental restaurants and bars such as The Unicorn, La Stampa, Cafe En Seine, Fitzer's. Guinness is still king but Belgian and German bottled lagers are challenging old loyalties.

Dublin conversation has changed utterly. Once, like a scene from Channel 4's Father Ted, you could chat endlessly about so and so, who had gone to such and such a foreign land. "These days, they're all coming back," said Mr Cassin. "Sure, people say I'm away working for three months. But it's a long time since I heard anyone was going for good."

Instead, the chat is about property. Irish home ownership stands at 80 per cent and rising, against a European average of 56 per cent. Would- be purchasers clutching tea flasks and sleeping bags queue for days outside site offices in south Dublin and Drogheda for the moment when affordable new suburban houses go on sale.

So what is behind this price explosion? "For good historical reasons, the Irish have had an obsessive attachment to land and acquiring it," said Roy Foster, Carroll Professor of Irish History at Oxford University. In a way, he says, it is a repeat of events in the 19th and early 20th centuries when British governments supplied large sums of money to allow the Irish tenantry to buy out their landlords. This time, the cash comes from a combination of affluent returning emigrants and expedient lenders bending rules on income-loan ratios.

John Bruton, leader of the opposition Fine Gael party, estimates that one-third of Dublin house sales are to cash-rich speculators capitalising on escalating rent levels. Behind this lies a large disparity in wealth distribution, inflated by decades of tolerance of tax evasion.

The boom is inevitably producing some regrets. "In the Eighties, I could have sold my semi in Kentish Town for a stud farm in Meath," ruminated Professor Foster. Among poorerIrish emigrants to Britain, dreams of a return are being dashed. "There is a lot of anger," said Father Jerry Kivlehan of the London Irish Centre. "People who came here in the Fifties and Sixties and thought they could sell up and go home find it very difficult to secure suitable accommodation."

Professor Foster foresees political tensions. "All this... is quite in line with other European cities, where most people expect to rent. In Ireland, we are becoming proud of being European. I'm not sure that this aspect of European life will be as agreeable as pavement cafe culture and cheap BMWs."

The Dublin government is trying to raise the supply of housing, notably by relaxing planning restrictions. Tax concessions available to investor- buyers have also been cut to dampen demand.

But Cool Hibernia still threatens to leave many behind. And it remains unclear what sort of Ireland will emerge. On Thursday, a meeting of economists, councils and property interests grappled with the issue. The PA system broke down and voices from the adjacent room drowned out the proceedings. Suddenly you could hear a born-again preacher telling the policy makers: "Let us now join hands together and pray to God ..."