Coming Back to Ireland

Bucks78

I'm coming back to Ireland after a couple of years away and just wondering what the story is with buying a gaff, i.e.

Are house prices ridiculously over priced?
Should I rent for a while and wait and see what happens?
Are most people who bought on their own going to be screwed in a few years?
Is there enough people to keep the rental market up afloat?


Any advice would be good, thanks.

Solair

I would advise that you rent for a year or so and and find your feet. It's not really advisable, regardless of the market, to rush into buying something until you're fully familiar with everything. Coming back to Ireland after a few years abroad can give one a false sense of familiarity with the market and with the country generally. Things may have changed drastically and you could end up buying something that you will not be happy with in the long term.

There's definitely enough demand to keep the rental market afloat. It's more a cooling down i.e. rents may not increase as drastically as they have been over the last few years. Large inward migration and relatively strong economic fundementals are keeping it very much afloat.

As for house prices, there's definite slowing in growth of prices. However, it's by no means a collapse or a major crisis in the housing sector at this stage. I would classify it as a "correction. The market's been over-heated for the last number of years and I think prices have overshot disposable income. The slight increases in interest rates (controlled by the European Central Bank) have possibly make people think twice before over stretching themselves with enormous mortgages.

I wouldn't buy something until the market's a little more predictable. At the moment it could be heading for a long plateau stage where house prices remain stable for years.

There could be a slight tumble though as speculators and investors leave the market if it's seen to be flattening off with no room for major capital gains. However, don't be fooled into thinking the prices have been driven predominantly by investors, the vast majority of homes sold here are owner-occupier. There would be a slight tumble, particularly in apartments, if the investors were to pull out. However, I wouldn't think that there'd be an overall collapse and it's unlikely to impact upon houses.

The other thing which could be artificially cooling the market at the moment is the up-coming general election. Certain parties have promised to reduce stamp duty (tax chargable on the sale of a house). This has caused a lot of people to put off selling / buying until they know who wins. So a lot could change after May/June when the results of Election 2007 are counted!

I certainly wouldn't jump into buying something until at least July/August when we will have a better idea of who the next Government is and what their policy on stamp duty and housing generally is likely to be.

Also, if you're buying something in a reasonably good area of one of the major urban centres i.e. Dublin, Cork, Galway and to a lesser extent Limerick (house prices have been slightly slower to grow there), you're unlikely to see any major slip in the value of your property.
However, I wouldn't be so confident about the prices of some of the far flung Dublin commuter belt developments. If there's any tumble in Dublin prices, people will start to move closer to the city. This could potentially result in a glut of far flung housing being on the market.

Like any market, there are always risks! It's just a matter of looking at all your options. So, again, I'd say rent for a year and do your analysis!