When Ireland was rescued from bankruptcy in 2010 by the EU and the International Monetary Fund, strong economic growth and surging property prices appeared a long way off. Less than eight years on, however, Ireland’s economy appears healthy and the housing market is tearing ahead.
In the year to December 2017, residential property prices across Ireland rose 12.3 per cent, according to the country’s Central Statistics Office (CSO), putting it among the fastest-growing markets in the world, alongside Iceland, Hong Kong and Canada.
In the capital, Dublin, values jumped 11.6 per cent over the same period, CSO data show. Since bottoming out in February 2012, house prices have risen 87.3 per cent. “We’re in a very strong position at the moment,” says Robbie Dillon, head of residential at estate agents Savills Ireland.
This is despite government measures to moderate the housing market (“We can’t go mad again,” cautioned then-finance minister Michael Noonan in 2013 when Ireland exited the eurozone’s bailout programme).
In 2015, ministers restricted mortgage lending to three and a half times income, in a bid to avoid the highly leveraged property spree that helped precipitate the 2007 crash. The government has also capped annual rent rises at 4 per cent in the private sector.
A shortage of new homes has also contributed to rising housing costs. Because of this there are plans for new developments around Dublin. Between 2007 and 2013 “most building stopped dead”, says Dillon. The government has announced a target of building 550,000 new homes across Ireland by 2040, with many of those aimed at satisfying the burgeoning market in Dublin.
As well as the growth of established villages such as Naas, in County Kildare, “there are entire towns popping up around Dublin that just weren’t there before”, says Dillon. One of those is Cherrywood, a 388-acre, masterplanned site to the south of Dublin .
“There’s a lot of inward migration [to Dublin]: we’re seeing expats returning home from the UK and New York,” says Dillon. “Brexit might be a catalyst, but it’s not the main reason.”
Many returners are tempted by an increasingly healthy jobs market. Last year, LinkedIn, the careers networking site, invested €85m in new offices in Dublin, and search-engine company Google, which has a local workforce of 7,000, has expanded its operations by acquiring more than 100,000 square feet of office space in recent months.
Multinationals are drawn in part by a favourable corporate tax regime, admits Dillon, but also by “an English-speaking, well-educated workforce”.
As well as pushing the city boundaries out, the return of expats and arrival of foreign residents is bringing life back to some of Dublin’s most affluent neighbourhoods.
“Buyers with €6-€8m are back, and are looking at Dublin 4 again,” says Dillon, referring to the bayside area in which social media company Facebook is reportedly eyeing 450,000 square feet of office space, and where some of the city’s most valuable housing stock sits.
Even so, after five years of sustained growth, the average price of a Dublin home has only just crept above 2005 levels, and is still 24.4 per cent below its peak, according to the CSO.
The impression among agents is that the market still has room to grow, with house price increase predictions ranging from 6-8 per cent for 2018.
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