Country Guides Country Guide: Ireland

Date Published:

30/05/2008

The Celtic Tiger, as Ireland’s economy became known, roared louder and longer than all others in Europe, so it’s little wonder that when it began to lose its voice that it should do so completely. In the decade 1997-2006 house prices increased by 253 per cent according to The Economist, but they have declined by 9.9 per cent year-on-year to end of August 2008 according to official statistics.

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Sherry FitzGerald, Ireland's largest estate agents, found that the average price of a second hand property in Ireland fell by 4.5 per cent during the second quarter of 2008, compared to a price reduction of 1.9 per cent in the first quarter of 2008. The results for the 12 months to June 2008 show a price reduction of 10.2 per cent.

The results for the Dublin market are even more pronounced with price reductions of 5.4 per cent in the quarter and 11.4 per cent in the year to June 2008. The Cork market recorded price deflation of 3.2 per cent in the quarter and 10.3 per cent in the 12 months to June.

Commenting on the results Marian Finnegan, chief economist, Sherry FitzGerald Group said: 'Since this phase of price deflation began in the Dublin market in the autumn of 2006, the results of the Sherry FitzGerald barometer shows that prices have fallen by approximately 16.5 per cent, effectively bringing prices back to end 2005 levels.

An apartment in Cork

'If one takes in consideration CPI inflation the real price deflation is closer to 25 per cent, a factor which suggests that the current phase of price correction is much more advanced than many commentators or other indices suggest. This bodes well for price realignment in the short- to medium-term.'

In layman’s terms what the downturn in prices means is that those looking to buy into the market – either domestic purchasers or non-nationals wishing to buy a property in Ireland – are more likely than at any time in the last few years to be able to afford to do so.

Take Dublin, the capital city, as an example. According to the permanent tsb/ESRI House Price Index the average price paid for a house in Dublin and outside Dublin in August 2008 was €374,302 (£346,000) and €232,570 (£215,000) respectively. House prices were down by 8.8 per cent and 9.5 per cent in the 12 months to August 2008 in Dublin and outside Dublin respectively.

Similarly, house prices declined in what are known as the commuter counties of Dublin – Louth, Meath, Kildare & Wicklow – by 0.8 per cent in August 2008. In the first eight months of this year prices fell by 7.8 per cent compared to 5.4 per cent last year. Year on year to August 2008 in the commuter counties was 9.0 per cent. The average house price in August 2008 was €296,416 (£274,000), down from €321,403 (£297,000) in December 2007.