I had the good fortune to live for six months in Ireland recently and wrote about my expat experience here. Ireland is an extraordinary country with a can-do spirit and the kindest people on the planet.
In honor of St. Patrick’s Day, I reached out to David Byrne, Managing Director of Lisney Sotheby’s International Realty, to learn more about the Irish property market. The following are key insights from David, including some surprising trends.
What is the state of the residential property market in Ireland?
Exceptional performance
The Irish property market is performing exceptionally well at the moment and has been for the last number of years. It’s a national pastime to discuss the property market; second, after the weather, the conversation you’re most likely to get into in Ireland is what’s happening in the property market.
Steady growth for the past decade
We’ve had a very interesting 10 to 15 years in the Irish market. We think back to the financial crisis in 2008 through 2010: property prices fell by as much as 80% from their peak. There was quite a catastrophic collapse in the Irish property market from too much credit; this was a global phenomenon. So, there was quite a recovery that needed to take place. We’ve seen the market grow steadily since 2012, despite a number of events such as Covid and the war in Ukraine.
Strong demand, limited supply
Despite all the challenges, the market has performed particularly well. One of the reasons is that we have a fundamental imbalance between demand and supply here. Our population is growing exponentially in Ireland, there’s a very strong economy. We also have a huge Irish diaspora throughout the world, and there’s an appeal in Ireland for that diaspora who are well-educated and in professional jobs seeing an appeal of returning to Ireland, as the country has kind of evolved and developed itself. So, there’s quite a pressure on the housing market.
Stalled housing production
Unfortunately, we have been very poor at the development of housing in Ireland over the last number of years. That stemmed originally from the financial crisis—there was no housing development for a considerable period of time. Then once that development got up and running, we weren’t producing anything like the number of houses that we needed to produce on a yearly basis.
Low-density model
Also, we have a very low-density model. The planners here fear a high-density model—which, as we know, in city centers works really well to accommodate a large number of people in a relatively small geographical space. But that’s not the model that they’ve opted for here—often citing that our cities are Georgian and Victorian cities, and struggling to see the juxtaposition between modern, contemporary high-rises cheek by jowl with these historic buildings. The tallest building in the city center is 10 stories high—and that’s it. This planning system is based on the architectural heritage of what is effectively a Georgian city. And that has resulted in an all-out reticence to high-rise development, be that office accommodation or residential development.
Ireland is unique in this low-density land planning
Yet you can look at a city like Boston, which has a beautiful blend of period buildings right next to modern, contemporary buildings—it works exceptionally well. But here, there’s a real battle—a real struggle—in trying to win the mindset away from retaining this low-density concept in Ireland. And making the case that yes, high-rise isn’t suitable for all parts of the country. You’ve got to protect the landscape, you’ve got to protect the heritage of cities. But you also have to maximize land use value. We just haven’t achieved it. We must be quite unique in that regard. You go to the UK, and the mainland—as a capital city, we’re a complete anomaly in that regard. And the citizens who want to buy houses are suffering as a result.
This has put pressure on available land, certainly around Dublin, which on one side has the coast and the other side has mountains. This has sustained house prices over the last number of years.
What are your predictions for where the market is heading over the next 12 to 18 months?
Strong momentum
The market has maintained strong momentum throughout Covid, despite all of our predictions that there would be a fallback in property prices. Then through last year through the war in Ukraine, the uncertainty around interest rate increases, and a steady flow of interest rate increases throughout 2022 into 2023 doesn’t seem to be dampening the momentum behind the demand for housing in Ireland.
Price-sensitive market
Certainly, price clearly is an important factor. Ireland is a price-sensitive market. Effectively, you can only borrow up to 3.5 times your income, or if you’re a couple, up to 3.5 times your combined income. But the economy is performing exceptionally well, and we’re at full employment in Ireland at the moment.
Fundamentals are strong, which should keep prices stable
A huge component of the Irish economy depends on multinationals existing in Ireland around the tech sector and pharma sector—which the Irish economy is heavily reliant upon. At the moment there isn’t anything in the market over and above what we already know, that I believe will destabilize the market. I don’t think there will be a huge push-up in prices, but at the same time, I don’t see prices falling back in a significant way. The fundamentals are still very, very strong.
Can you talk about the role that multinational corporations play in the Irish economy?
Ireland is considered the Delaware of the European Union, with favorable tax provisions for corporations. So favorable, in fact, that many companies founded in the U.S. – such as Google, Meta, and Apple – are technically headquartered in Ireland.
Multinationals have established deep roots in the only English-speaking country in the EU
Our advantageous corporation tax has been very successful in drawing multinationals to Ireland over and above other factors: we’re an English-speaking country, we have a very well-educated population, our education system here is highly regarded. We are a moderate country both politically and from a climate point of view. And we’re strategically located between the U.S. and Europe. And we’re now the only English-speaking country in the European Union, albeit at the very western edge of Europe.
We don’t have a concern about a mass exodus of multinationals, given the deep roots that they have placed in Ireland. So, this is stable, although the country is very reliant on it.
What is the impact of Brexit on the Irish property market?
Is there more interest by multinationals to shift operations to the Republic of Ireland, as the only remaining primarily English-speaking EU country?
Limited impact from Brexit
There was a lot of talk about this—there was a flurry of conversation about whether they would move to Dublin, or move to Berlin? There was kind of, dare I say, an expectation that it would be Dublin. Did we see evidence of it? Yes, we did. In any significant, meaningful way? No.
We saw law firms and banks establish a presence in Ireland so that they could continue serving EU clients under EU legislation. But no significant inflow as a result of Brexit.
What about seasonality?
Are there particular buying seasons that you might share? In the Seattle market, there is typically more activity in the spring and fall.
Spring and fall season
Typically spring and fall—very seasonal. The market will kick off here in late January with limited inventory, and inventory will increase throughout March, April, and May. The market is linked with the weather – the season lasts through the end of June. Then July and August are very quiet. Then September, October, and November are very busy, and it shuts down for Christmas. It is exceptionally seasonal, albeit there will be activity right across the year.
What are the trends in purchases by international buyers?
Where are they from, what product types are they buying, and where in the country are many of these purchases (i.e. primarily Dublin/Cork/other cities vs. rural locations)?
Majority of international buyers have Irish lineage
They’re very dispersed, Kelly, in truth. I would say that where you have international buyers looking to purchase in Ireland, you will find at some point there is a connection to Ireland. They will either be Irish diaspora who have moved from Ireland in the last 10 to 20 years, moved to the US, moved to Asia, moved to Australia—they probably came out of college at a time when there weren’t opportunities in Ireland. For people graduating in the ’80s, their only opportunity was to emigrate. Many went to the U.S., Asia, and Australia, and did exceptionally well. And then, with this connection to Ireland, they begin to look to relocate back to Ireland. I would say the majority of international buyers have some Irish lineage.
We do have international buyers looking at Ireland for other reasons, for lifestyle reasons. We do have country homes, leisure homes—we do have a coastline and beautiful countryside.
Trend: Moving to Ireland for the weather(!)
One of the new trends we’ve noticed in the last number of years are people looking for an additional residence in Ireland trying to escape temperatures, believe it or not, in mainland Europe, where they need a more temperate climate.
Trend: Moving to a temperate, moderate society
But that is a trend. And equally what has been very interesting in the last couple of years is maybe an increase in interest in Ireland because it’s quite a temperate, stable society, economy, climate. You have people saying, “well, if I could move to Ireland, my kids could be educated there, and English speaking.” We’ve had more of that, which is really interesting. I guess that’s in response to radicalization in other countries, or something happening in their own country where they want to move away from, and they deem Ireland a more temperate place, moderate place to live.
What about North Americans of Irish heritage?
Do you find particular demand among those of Irish descent? Are there restrictions on purchasing property?
North Americans buy vacation homes or retire to Ireland
For that cohort, they would be looking for holiday homes or retiring to Ireland. There are no restrictions on buying, but you need a permit to stay longer than 90 days. That won’t be an issue for a holiday home.
If you have an Irish grandparent, you likely qualify for Irish citizenship; I have dual US/Irish citizenship through my grandfather who grew up in County Limerick. Alternatively, Ireland offers a Stamp 0 residency, which allows those of independent means to live or retire in Ireland. Let’s connect if you’d like to hear more about my experience, or would like to access more resources to analyze your options for meeting international requirements like these.
Please share your insights on the best value for money, other trends
Value depends on one’s perspective
Price is a perspective, right? The Irish perspective is that property prices are exceptionally high, and it’s putting a strain on those who want to get onto the property ladder. But if you move from London, New York, or Boston to Ireland, you’re going to see great value for money compared to where you’re coming from. And actually, that’s often why you have the Irish diaspora looking to come home—because they see such huge value, and then the quality of life attached to that they perhaps couldn’t afford elsewhere.
Extraordinary value outside of the major cities
Where people will see great value is if they move outside of Dublin and Cork, the two principal cities, and into the countryside. The price points drop right down, and that’s where Americans come to Ireland and they just can’t get over the perceived value of a house on its own grounds of 10, 15, or 20 acres for what they would perceive to be very, very good value. So, there’s good value here if you’re looking to buy a lifestyle product.
American buyers are not buying investment products for pure investment return
We see a huge number of funds looking to acquire real estate products in Ireland across the commercial markets and residential markets. They tend to be bulk products as opposed to individual properties. We don’t see a huge trend of American buyers trying to buy investment products here for pure investment return. They would be far more likely to have the need for housing here if they had children attending university here and they will buy accommodation for them.
Strength of the dollar contributes to Americans’ buying power
With the strength of the dollar over the euro in the last couple of years, Americans have seen such huge value. Prices drop significantly once you move out of the two capital cities.