Is There a Real Estate Bubble in Ireland?

Posted by admin 21/06/2016 0 Comment(s)

Are you looking to sell overseas property in Ireland? Well, you couldn’t have picked a better time as there is a huge interest in Ireland right now, especially from cash rich overseas investors.  Ireland has staged a smart recovery from the housing crash of 2008, which wiped off 50 percent from the property market values.


 Indeed, average property prices in Ireland have been up by 15 percent over the last year and country is right on top of Knight Frank’s global house price index. Knight Frank says that Ireland has staged an amazing recovery in its property market over the past couple of years.
Back in 2012, Ireland suffered the second highest fall in property prices in a survey of 55 nations. In the period from 2008 to 2013, property prices in Ireland were declining by 10% every year. Things couldn’t have been any worse for Irish homeowners and nobody wants to return to those times ever again. 


Ireland’s resurgence can be attributed to Dublin, which has one of the best performing housing markets in Europe, especially in posh neighbourhoods such as Ballsbridge and Ranelagh. The bidding for homes in this part of the world is highly competitive, often, properties sell for 20 percent over the asking price.


 Ireland has many things going in its favour – it is the fastest growing economy in the eurozone. Ireland achieved an economic growth rate of 4.6% in 2015. But there are serious concerns that we may be at the beginning of another real estate bubble in Ireland.


These concerns have been expressed by top economists such as Colm McCarthy, who said, “there is another house price bubble under way in the Dublin area.” This is despite the fact that home prices in Ireland are still 39 percent below their pre-crisis peak of 2007. Indeed, according to Knight Frank, Ireland pretty much “languished at the foot of the table” from 2009 to 2012.


However, economists such as Colm McCarthy have warned about the rising threat of homelessness for many families due to property prices becoming unaffordable for a majority of Irish.  They allude to the fact that even simple three-bedroom and four-bedroom homes in middle class suburbs of Dublin are today unaffordable for many families in Ireland.


Mr. McCarty writes in the Independent, “Notwithstanding the efforts by the Central Bank to keep mortgage credit under control, some extraordinary prices have been quoted recently for the small parcels of land that become available.” He warns about the Dublin land prices which have risen to unaffordable levels.


Similar concerns have been voiced by the Paris-based economic think-tank OECD about an emerging real estate bubble in Ireland.  The OECD warned, “Pent-up demand after a long crisis may result in stronger private spending than projected. Strong property prices may boost construction activity further in the short run, but also risk sparking another spiral of higher property prices and credit.”
The OECD is emphatic that “Ireland’s still high debt leaves it particularly vulnerable to any re-emergence of the banking and sovereign debt crisis”.


A powerful documentary by UTV Ireland titled, ‘Insight: Is the Property Bubble Back?’ investigated the state of the property market in Ireland. It found that average rents in Dublin are higher than ever before, and the surging home prices here are forcing the middle class to buy homes in commuter towns such as Wicklow and Naas. 


There is no question that there is every reason to be concerned about the state of the real estate market in Ireland, but it cannot be denied that there is a huge interest in the country from cash rich overseas investors, from Britain as well as from emerging nations such as China. The overseas property market in Ireland may be an expensive one, but it has never been more desirable than it is now. If you want to sell property in Ireland to cash rich overseas property investors contact us today.

 

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