Greener pastures: Is it time to snap up an Irish holiday-home bargain?
Turn the clock back a few years and owning a holiday home in Ireland was a pipe dream for most people. Then the property crash happened. Now, however, a combination of falling house prices and low stamp duty rates means estate agents across Ireland are reporting growing interest from overseas, particularly the Britain. So is now the time to pick up the holiday cottage of your dreams? Are there bargains to be had? And is it a safe investment?
Ireland was the first European country to watch its entire banking system fail and the subsequent collapse of the property scene was famously described by Michael Lewis, in his Vanity Fair opus, as “breathtaking”. At the rate money currently flows into the Irish treasury, Irish bank losses – estimated at €106bn – would absorb every penny of Irish taxes for at least the next three years, he recently reported.
Patrick Honohan, the chairman of Ireland’s central bank, described the total injection of state cash as “one of the costliest banking crises in history.”
While the Central Bank is working on the basis of a 55 per cent drop in house prices between 2007 and 2013, Marcus Magnier, director with Colliers International, is one of many estate agents reporting that values have already fallen by that much – possibly more. “It’s been widely reported that the market is down 35 per cent from its peak and there’s another 20 per cent to go, but that’s rubbish,” he says. “There’s absolutely no point in waiting another 12 to 18 months for value. If we’re not at the bottom yet, we’re extremely close to it.”
It’s the cottages by the sea (think Cork, Kerry, Galway and Wexford) that have been hit particularly hard, he says. “Holiday homes indicate surplus monies, which simply don’t exist in the Irish psyche at the moment. All around the country, you’ll find them being sold at prices you literally couldn’t build them for. I’ve just had a lovely converted schoolhouse come on the market for €20,000 and other homes are going for even less.”
Potential buyers would be wise to view their purchase as a lifestyle choice, rather than an investment, warns Magnier. “Ireland is in for a slow recovery and it’s hard to even say where the finishing post is. Is it doubling your money? Making a little profit? I’d suggest people see their purchase as getting a smashing little place for friends and family to use at a fraction of the cost of what you can buy somewhere for in other parts of Europe.”
One thing you can count on is the holiday rental market, he says. “It hasn’t changed much, so you’ll get a far better return than you would have done in the boom years. Back then, people might have bought something for €1m and made €30,000 a year on rental. Now that property is probably worth €400,000 and you’ll still get €30,000 in rental fees.”
Remember hotel prices have taken a nosedive – upping the holiday competition – but on the other hand, says Ian McCarthy, MD of Sherry FitzGerald Countrywide, the Irish are more likely to holiday in their own country than ever. “So if you buy a cottage in, say, Wicklow, for €240,000 and you don’t use it all year round, you can expect around €850 a week for holiday rental in peak season and the rest of the year an average of €200-250 per week. That means you could generate an income of €15 to €20k a year – a 10 per cent return on your investment.”
Last week in Wexford, three in five of Sherry FitzGerald Countrywide buyers were UK based and that is not unusual at the moment, reports McCarthy. He adds that since January there have been visitors to their website from 134 countries – the top five being the UK, US, Germany, Australia and France. “But it’s not as if it’s suddenly gone mad everywhere. It’s very dependent on which county.”
The Shannon navigation system is popular among foreign buyers, for example, while areas that have seen less interest include the far west and north-west.
“It’s also important to remember that areas like Kerry, Cork, Wexford and Donegal have traditionally sold a lot of properties to the UK. It was only in the Celtic Tiger years that the Irish took over as the big buyers,” says McCarthy.
A further myth, he says, is that sellers are frequently accepting offers well below their lowest asking price. “On average, we agree a figure within 5 per cent of the asking price.”
In the country homes market, Knight Frank Ireland reports that nearly every second call is coming from someone abroad. “It’s a buyer’s market in terms of choice,” insists Robert Ganly, head of residential and country, although he advises buyers not to have high hopes of a high return on investment within the next 10 years. “It’s the way of life that needs to appeal to people and that’s not hard really, when you think that we don’t have huge traffic jams and crowds of people, but we do have lots of open space and nice beaches. It’s also a relaxed, friendly, easygoing country.”
Other good reasons to buy in Ireland, according to Savills, is the fact that it is an hour from Heathrow and there is excellent accessibility once you get there, even to remote places. “One of the best things about Celtic Tiger was the road systems that were created. There’s a fantastic network of motorways taking you in every direction, so whereas before it would have taken you hours to get somewhere, now it’s easy,” says Pat O’Hagan, from the Ireland country house team, who is seeing particular interest in houses within an hour of Dublin airport in the €500,000 to €700,000 region and for country house estates on 20 acres at €1m plus.
However, not all the overseas attention is translating into sales. “Certainly, there is growing interest, mostly from the UK and Irish expats. But at the moment, people are mainly checking out what is around,” he says.
Report by By Kate Hilpern – The Independent (UK)
