property investments ireland

Ireland may be a small country, but it is rich in culture and diverse offerings. Its lively people and inclusive culture make tourists and foreigners consider making property investments in Ireland. Also known as the Celtic Tiger, the property market boomed from the mid-1990s to mid-2000s, making it one of the wealthiest countries in the European Union. However, the economy suffered following the recession. The recession affected the economy, job market, the business atmosphere, and the overall vitality of the country. Still, the Irish people proved that they could surpass it all. 

The Economy of Ireland

The economy of Ireland is set to increase by 4% this year and another 2.7% by 2020. However, it could suffer from a no-deal Brexit, according to an Irish business lobby group. Based on the Ibec Q3 Quarterly Economic Outlook, Ireland households benefited from increased incomes thanks to robust economic growth in the past years. Ibec claimed that a no-deal Brexit is likely to impact economic growth as a result of falling consumer confidence, depreciating sterling, increasing costs, and disrupted trade. Still, many are hoping that the Irish will surpass this, as to how they exceeded the 2008 recession. 

According to the forecast of the European Commission, Ireland’s economy will grow by 4.1% this year. The current unemployment rate is down to 5%, and the real wages rate is increasing by 3.2%. In terms of income inequality, it significantly declined by 8% in the past years. The country ranked 24th in the World Economic Forum Global Competitiveness Index. Additionally, the 2019 Economic Freedom Index ranked Ireland as 6th freest in the world, second out of 44 countries in the European region. With an economic freedom score of 80.5, Ireland posted impressive growth. However, it also noted that its high government debt and issues with banking systems. The country attracts foreign investors because of the country’s low corporate taxes and a talented workforce. 

Liveability in Ireland

Ireland is a highly preferred country by most Europeans, with Dublin being among the ten most liveable cities, according to the ECA International annual Location Rating Report, Dublin takes the 9th spot, tying with Gothenburg and Luxembourg. This ranking put Dublin ahead of the Vienna, Zurich, and Edinburgh. Many European expats prefer Dublin for its improvements in personal safety, infrastructure, and healthcare services. 

The cost of living index in Dublin is 78.65, making it ranks as the 41st out of 364 countries in the world. A family of four will spend roughly €3,048.81 monthly, excluding rental fees. 

Property Investments in Ireland

As the country receives substantial investment funds, job creation is at an all-time high. With this, more people are coming to the country, and this creates a much-needed demand for housing. In terms of rental stock and completions, Dublin still has much to do. Knight Frank reported that the country has a yearly requirement of 10,000 units yearly, with only 4,000 units delivered by 2016. There is a continued lack of zoned development land, and JLL predicted that it would take about seven years to support supply and demand difference. 

The current undersupply in Ireland’s property market calls for increases in rents. From 2007 to 2012, the house prices in Dublin dropped significantly with rapid rebounds. The Central Statistics Office reported that Dublin house prices increased by 5.5% to September 2018. Rental rates increased by a staggering 10.9% year-on-year, but still way below their 2007 peak. Given this, property investments in Ireland still have plenty of room for growth. 

Property Market Trends in Ireland

The house prices in the country are still growing strongly. Based on the CSO data, October 2018 national residential property price appreciated by 8.44% from the year to October 2018, lower than the 11.67% year-on-year rise from last year. The average house prices nationwide increased by 5.5% in 2018 from a year earlier. Dublin posted an increase in its residential property price index to hit 6.31%. 

The housing markets outside of Dublin is also posting even higher house price appreciation, with residential properties increasing by 10.62%. 

Prices of apartments in Ireland increased by 9.74%, and house prices grew by 8.57% during the year to October 2018, according to Draft.ie. Standard and Poor’s forecast showed that Ireland’s house prices would continue to grow strongly in the next three years. House prices will increase by 8% this year. By 2020 and 2021, house prices will grow by 7% and 8%, respectively. 

Foreign investors will likely see their money grow by investing in small apartments in Dublin. With Dublin 1 giving the best returns. 

CHG Recommendation: Make Property Investments in Ireland Now

It is the best time to enter the Ireland market now. The country as a wide supply and demand discrepancy. Investors will see high returns on investment if they put their money in apartment rentals. Those who want to invest in Dublin may get the best returns in Dublin 1. A one-bedroom apartment can have gross rental yields of 8.6%. While investing in Dublin 7, a one-bedroom apartment can have gross rental yields of 8.4%. Note that bigger houses have lower rental yields than smaller units. 

Ireland has a moderate rental income rate and capital gains taxes. Gross rental income in the country has a 20% tax rate, which must be withheld by the tenant. The taxpayer can then file a return and claim relief from any property-related expenses. Take note that the country also has strong tenant protection laws. The Private Residential Tenancy Board discusses rent disputes. Rental rates are negotiable by both the tenant and landlord, but rates must not be over the current market rate. Rental rates are reviewed and adjusted on a yearly basis. 

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