As Ireland’s formerly hot property market feels the first real biting signs of cooling, analysts are wondering just how bad it will get. In the meantime, the country is bracing itself for a potential economic recession and planning strategies for a soft landing. If you’re thinking of buying property in Ireland, now might be the time to look at a few alternative strategies yourself as Ireland’s property market prospects are uncertain.
In this article we’ll take a look at the recent developments on the Emerald Isle and consider some investment strategies that might work for savvy buyers. Since fast-turnaround-for-profit sales do not look possible at the moment, buyers need to consider alternatives closely before taking the plunge to buy property in Ireland.
So, what’s happening right now?
Property prices in Ireland are beginning to fall. In some areas the prices have dipped as much as 10% or more in recent months and sales volumes are also dropping. Fears are being fueled by a gross domestic product growth rate that has dropped from 8.1% in June of 2006 to a present 5.4% rate according to the Central Statistics Office. There is also a great deal of concern that the US economic slump will adversely impact Ireland. The country sells 18.5 per cent of its exports to the US, according to MSNBC. Additionally, much of the growth rate in the last few years has been due to the construction industry which is currently experiencing a slowdown.
Other omens of a downturn are also present. The central bank has slashed its economic forecast for next year by 0.75 percent, and new housing starts are expected to drop sharply.
Despite all the negative news, buying property in Ireland does still present some serious potential for investors. The dip in prices for example, is making this rather expensive market a bit more affordable. Rental prices have dropped in reaction to other economic indicators, but buy-to-let investors can still enjoy a fair amount of activity.
The Irish travel forecast remains quite strong. The industry is worth an estimated EUR 26.3 billion according to the World Travel & Tourism Council and the growth rate projection for 2007 is 4.2% with expected sustained growth of that amount per annum between 2008 and 2017. With a strong attraction for Europeans and holidaymakers from other parts of the world interested in Irish culture and sights, this industry is likely to remain the silver lining in the present black cloud.
Investors looking at buying property in Ireland might want to consider other strategies besides buy and flip at the moment. A similar strategy of buying to retain for a longer duration as is being employed in Spain right now might pay off well down the road. Also, buying to let, despite lower rents, might prove a wise choice.
The days of a massive boom in the Irish property market seem to be coming to an end, but that doesn’t mean this country no longer bears watching. With a tourist industry that remains strong, investors might simply want to take a different approach.