BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business: The Economy
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Tuesday, 8 June, 1999, 17:36 GMT 18:36 UK
Luck of the Irish hits home

New 220,000 homes in Dublin were snapped up
The lifestyle's good, stars of stage and screen have homes there and the neighbours are prosperous.

But this is not Hollywood - this is Ireland, land of unspoiled countryside, a relaxed pace of life - and now some of the highest house prices in Europe.

A new report has named Ireland as the second most expensive place in the EU to buy a house. A typical urban home there costs 18.2 times the average disposable income, compared with 12.7 in Britain, 10.5 in Belgium and 8.3 in the United States.

Only in the Netherlands are houses more expensive, costing more than 19 times the average salary.

Indeed, prices in Ireland have been soaring for several years to such an extent that many young people on average incomes have been priced out of the market.

This four-bedroom bungalow in County Cork is for sale at 295,000
Homes that 15 years ago cost only three times the family car are now sporting price tags more like those in London than those of a rural retreat.

The average home in the capital costs now around 135,000. But the sky is the limit. Last year, one Victorian end-of-terrace town house sold for a record 5.2m.

Fuelled by a major shortage of property, house price inflation has leapt to an average of 30% nationally, and more than 50% in some parts of Dublin.

With another 9% rise in the first quarter of 1999, it is little wonder that developers have been seeking to cash in.

A spree of building work this year has begun to meet demand. Market watchers predict that prices will level out, or even dip slightly.

Nonetheless, one-bedroom flats in Dublin start at about 80,000, according to estate agent Lisney.

Good-quality, two-bedroom flats cost between 200,000 and 300,000. And the company recently sold a penthouse in a particularly fashionable area of the city for 680,000.

Prosperity prompts 'crisis'

Prices have risen so sharply that former premier John Bruton has called on Irish Prime Minister Bertie Ahern to take personal responsibility for the "national crisis".

The government is already under pressure to rezone agricultural and industrial land for housing.

The price survey, by the Dresdner Kleinwort Benson brokerage group, suggests that a turn-around has happened for a country which, for most of this century, suffered double-digit unemployment and constant emigration.

Dublin is enjoying an economic boom
The new prosperity is attributed to a combination of factors that have emerged since the 1980s.

Firstly, the country has reaped the benefit of billions of pounds in development aid from the European Union.

Secondly, Ireland has been given the label Celtic Tiger, as American hi-tech corporations, such as Dell, Gateway and IBM, identified it as an attractive foothold in the EU. They were drawn by the lowest corporate tax rates in Europe and a highly-skilled, English-speaking workforce.

Such investments have helped the country's economy to grow by 7% last year.

Growth is also boosted by low interest rates. When the Republic joined Europe's single currency, interest rates dropped to 2.5%, compared with 5.25% in the United Kingdom.

The Good Friday agreement, heralding a new era of peace both north and south of the border, was another confidence boost.

A huge influx of English people in the 1980s further boosted demand - and prices.

Poll tax boost

Tom O'Sullivan, owner of Key Properties estate agency in the south west of Ireland, points to the development in the 1980s, when property prices in England were rising, and some Welsh nationalists burned down English-owned holiday cottages in North Wales. Back then, the Irish market was still a largely unexplored territory.

"I sold my first house to an Englishman in 1987 and haven't stopped since," he said.

Then came the poll tax. "People moved here to get away from it - they told me so," says Mr O'Sullivan.

"In the late '80s and early '90s, all properties here were very cheap. You could get a cottage for 8,000 or 10,000. If you came here with 50,000 from England, you'd be left with a nice nest-egg."

The Republic also holds major financial attractions for pensioners - free electricity, water rates, television licences, travel and telephone rental.

So in many ways, the population have found themselves victims of their own success. Ex-patriates have been returning home in large numbers, drawn by plentiful jobs - only to find themselves in hot competition for a place to live with other former exiles, English people in retirement and celebrities.

Star homes

Earlier this year, estate agents Hamilton Osborne King sold a house in Killiney, 10 miles from the city centre, owned by Simple Minds rock star Jim Kerr.

The offer price was 2m, but it sold for 2.7m.

Julia Roberts is one of a host of stars with Irish homes
Stars who have already snapped up homes in the Republic include Ronnie Wood of the Rolling Stones, actor Jeremy Irons, film-maker Lord David Puttnam, and Hollywood superstars Tom Cruise and Julia Roberts.

Irish U2 singer Bono has a 2m mansion south of Dublin, and Chris de Burgh lives in Killiney.

Period properties are sold or auctioned with apparent ease.

For the ridiculously rich, the seat of the Guinness brewing dynasty is on the market with a price tag of 15m. Experts believe it could fetch up to 20m.

Farmleigh, a Victorian mansion set in 78 acres next to Phoenix Park in Dublin, was valued at less than 1m in 1992. Now it is likely to shatter all nationwide property price records when it goes under the hammer next month.

The three-storey Georgian mansion has 20 bedrooms, 14 bathrooms, six houses in the grounds and two entrance lodges.

At the other extreme, concern about young families being squeezed out of the housing market has reached such a pitch, that the Department of the Environment and local authorities have launched "affordable housing" schemes, in which buyers acquire a share in their new home instead of footing the entire bill up-front.

Given the price boom, fear and speculation of a property recession have been inevitable.

But analysts believe prices will stabilise, rather than drop. They say in cities such as Dublin, Cork and Galway, a lack of development land together with a healthy economy is likely to keep prices high.

Search BBC News Online

Advanced search options
Launch console
See also:

26 May 99 | The Economy
House prices rise but sales fall
14 May 99 | Your Money
Ireland swept by share fever

E-mail this story to a friend