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Last Updated: Oct 15, 2016




Ireland’s house prices continue to rise, albeit at a slower pace, despite the country’s strong economic growth last year. The national residential property price index rose by 6.92% (6.41% inflation-adjusted) during the year to July 2016, a slowdown from annual rises of 10.7% in July 2015 and 13.4% two years ago, according to the Central Statistics Office (CSO) Ireland.

On the other hand, a recent report released by Ireland’s largest property website Daft.ie showed that nationwide average house prices rose by 7.6% y-o-y in Q3 2016, a slight slowdown from an annual growth of 8.4% in a year earlier.

In Dublin, Ireland's capital city, house prices slowed even more. Dublin's residential property price index rose by 3.8% (3.3% inflation-adjusted) during the year to July 2016, according to the CSO.

House prices were pushed in 2013-4 by Ireland’s strong economic growth. The housing market then slowed, especially in Dublin, largely because of central bank measures in January 2015 which limited loan-to-value ratios on houses priced over €220,000 and on 2nd purchases to 80%, and 70% on buy-to-let purchases. Loans for private dwelling homes were also limited to 3.5 times gross income.
  • In Dublin City Centre, the average asking price rose by 5.4% to €261,206 (US$287,536), during the year to Q3 2016.
  • North County Dublin's average asking price rose by 6.3% y-o-y to €276,814 (US$304,717).
  • West County Dublin's average asking price rose by 4.4% y-o-y to €276,497 (US$304,368).
  • South County Dublin's average asking price rose by 1.3% y-o-y to €527,058 (US$580,185).

Local housing markets outside Dublin remain very strong, with double-digit annual house price rises. Outside Dublin, average residential prices rose by 11.3% (10.8% inflation-adjusted) during the year to July 2016, according to the CSO Ireland. Based on Daft.ie's figures:
  • In Carlow (located in Leinster, eastern Ireland), the average residential asking price was €156,677 (US$172,470), a 8.8% y-o-y increase to Q3 2016.
  • In Cork County (located in Munster, in Ireland’s south), the average asking price was €192,598 (US$212,012), up by 10.1% y-o-y to Q3 2016.
  • In Galway County (located in Connacht, Ireland’s western region), the average asking price was €172,057 (US$189,400), a 13% rise during the year to Q3 2016.
  • In Waterford City, the average asking price was €147,498 (US$162,366), up by 16.4% y-o-y to Q3 2016.
  • In Limerick City, the average asking price was €163,692 (US$180,192), a 13.7% y-o-y increase to Q3 2016.
  • In Monaghan (located in Ulster, in the Republic of Ireland's north), the average asking price was €145,657 (US$160,339), a 7.5% y-o-y increase to Q3 2016.

Apartment prices in Ireland rose by 7.4% during the year to July 2016 (6.9% inflation-adjusted); house prices rose by 6.8% y-o-y (6.3% inflation-adjusted) over the same period.

Ireland house pricesNationwide residential property prices are expected to increase by about 5% this year, according to Daft.ie.

In Q2 2016, the country's economy posted 4.1% annual growth, slightly up from 3.9% in the previous quarter, supported by an increase in fixed investment associated with intellectual property assets abroad. Growth is expected at 4.9% this year and 3.2% in 2017, from a massive 26.3% last year (largely a fictitious figure), based on latest projections released by the International Monetary Fund (IMF).

Analysis of Ireland Residential Property Market »


RENTAL YIELDS
Last Updated: Jun 17, 2017



Gross rental yields on apartments remain excellent in Dublin, in certain areas and for certain sizes.  Across the range of apartment and house sizes, Dublin 1 earns the best returns.

How much will you earn? One-bedroom apartments will earn relatively more than two-bedroom houses (in terms of return-on-investment), and those in turn will earn relatively more than 3-bedroom houses, etcetera. To earn higher returns, buy smaller units.

As is perhaps to be expected, the highest yielding apartments are those in the lowest-cost areas.  It was ever thus!  These areas also tend to be those where prices are least volatile, thus least exposed to a downturn.
  • In Dublin 1 a 1-bedroom apartment bought for around €200,000 can rent for around €1,380 per month, earning a yield of 9.35%.  Please remember that these yields are gross; net yields will be less.
  • In Dublin 7 a 1-bedroom apartment bought for around €180,000 can rent for around can rent for around €1,300 per month, earning a yield of 8.7%
  • Large houses (4 and 5 bedrooms) tend to earn relatively low yields, except in Dublin 1

Round trip transaction costs are moderate for buyers of residential property in Ireland. See our Ireland residential property transaction costs analysis and our Residential property transaction costs in Ireland compared to other countries.

Read Rental Yields  »



TAXES AND COSTS
Last Updated: Jun 19, 2017



Rental Income: Gross rental income is taxed at 20%, withheld by the tenant. The taxpayer may file a return and claim relief for expenses related to his property.

Capital Gains: Capital gains is imposed at a flat rate of 33%. Taxable capital gains are generally computed as selling price less acquisition costs, adjusted for inflation, and improvement costs.

Inheritance: Inheritance is taxed at a flat rate of 33%, with certain non-taxable amounts deductible before the tax is levied.

Residents: Residents are taxed on their worldwide income. Numerous tax credits and deductions are available to residents; of which the actual values depend on the taxpayer’s personal circumstances.

Read Taxes and Costs  »



BUYING GUIDE
Last Updated: Jun 20, 2017



Round-trip transaction costs are around 4.94% to 13.205% of the property price. The buyer pays the stamp duty (1% to 2%), legal fee (1% to 1.5%, plus 25% VAT), and registration fee.

Read Buying Guide  »



LANDLORD AND TENANT
Last Updated: Jun 06, 2006



Ireland has strong tenant protection laws.

Ireland Ballyroon CountyRents. The parties are free to negotiate rents, but the amount must not exceed the open market rate. The rent may be reviewed and can only be adjusted once a year. Rent disputes go to the Private Residential Tenancy Board (PRTB).

Tenure Security. Security of tenure is effective for four years; during the first six months, the landlord can terminate the leasing contract without specifying grounds but once a tenancy has lasted six months, the landlord can only terminate the tenancy for the next 3 1/2 years citing just causes.

Read Landlord and Tenant  »



ECONOMIC GROWTH
Last Updated: Oct 15, 2016


Tax inversions artificially inflate Ireland’s economic growth

Ireland modern houseIreland stunned the world with a GDP growth rate of 26.3% last year,based on figures from the Central Statistics Office (CSO) Ireland.This was mainly driven by companies nominally relocating in the country, such as Perrigo Co. and Jazz Pharmaceuticals Plc. They are attracted by the country’s very open economy and by its relatively low tax inversion rate of 12.5%. These corporate inversions result in little real change in output, just a change in where the legal ownership of the output is located.

“We are a very small economy, and if we get a big increase in assets, this is what happens,” said Michael Connolly of CSO.

However, these growth numbers have downside risks. First, tax inversions only artificially inflate the size of Ireland’s economy. When a corporation’s headquarters become resident in Ireland, all of its profits (including profits generated abroad) are counted as part of the country’s gross national income – which dramatically increases the country’s economic growth without corresponding increases in employment. Also, this increases Ireland’s contribution to the EU budget, which is based on the size of a member’s economy. The growth figures are also misleading and will create confusion on the real condition of the Irish economy. In fact, this will worsen people’s skepticism with regards to the reliability of economic figures.

“To me, it looks like Ireland is growing at a reasonable, not dramatic rate,” said economist Jim Power. “There are so many transactions going on that nobody understands.” Ireland’s underlying economic growth last year was 5.5%, rather than the massive 26.3%, according to Power. Nobel Prize award-winning economist Paul Krugman described the phenomenon as “Leprechaun economics”.

In Q2 2016, the country's economy posted 4.1% annual growth, slightly up from 3.9% in the previous quarter, supported by an increase in fixed investment associated with intellectual property assets abroad. Growth is expected at 4.9% this year and 3.2% in 2017, based on latest projections released by the International Monetary Fund (IMF).

Ireland GDP inflationIn August 2016, consumer prices dropped 0.1% from a year earlier, after rising by 0.5% in July 2016 and 0.4% in June 2016, according to CSO. Nationwide inflation rate is expected at 0.3% this year, from -0.03% in 2015, 0.3% in 2014, 0.5% in 2013, 1.9% in 2012, and 1.2% in 2011, according to the IMF.

Unemployment dropped to 7.9% in September 2016, down from 8.2% in August 2016 and 9.1% in September 2015, according to CSO. This is also substantially lower than the 13.6% average from 2009 to 2013. Ireland's average unemployment rate was 4.4% between 2000 and 2007.

Ireland had the euro zone’s highest budget deficit in 2010, at 31.2% of GDP. In November 2010 it had no choice but to seek a €67.5 billion ($82 billion) bailout from the European Union (EU) and the International Monetary Fund (IMF). In exchange, Ireland committed to a harsh austerity program.

The country spent around €80 billion to establish the National Asset Management Agency (NAMA) to buy toxic loans, primarily to improve the availability of credit to the Irish economy, and to remove non-performing loans from bank balance sheets.

In June 2012, 60.29% of Irish voters agreed to the European fiscal compact of May 31, 2012, allowing Ireland to access to the European Stability Mechanism, a €500 billion ($618 billion) bailout fund.

By 2011 the Irish budget deficit had fallen to 12.5%, and to 8% in 2012, comfortably within the 8.6% target set by Ireland’s international creditors: the EU, ECB and IMF. The budget deficit declined again to 5.7% of GDP in 2013. At end-2013 Ireland became the first country to exit the eurozone bailout programme.

In 2015, the budget deficit shrunk to 2.3% of GDP, from 3.9% of GDP in 2014, amidst strong economic growth and a surge of corporation tax payments.

The deficit is expected to fall to 0.9% of GDP this year and to 0.4% in 2017, before achieving a balanced budget in 2018, according to government estimates.

Likewise, government debt is expected to fall from 93.8% of GDP last year to 88% this year and to 85% in 2018, falling below the euro area average.







  • Strong and stable economy
  • Low to moderate costs and taxes
  • Strong rental market for migrants
  • Rent decline in recent years
  • Significant pro-tenant laws
RESIDENTIAL PROPERTY FACTS
Price (sq.m): n.a. For a 120 sq. m. property, usually an apartment.
Rental Yield: 7.18% For a 120 sq. m. property, usually an apartment.
Rent/month: €1,690 For a 120 sq. m. property.
Income Tax: 10.05% Assumptions: Owners are a non-resident couple drawing US$ / €1,500 per month in rent, with no other local income.
Roundtrip Cost: 9.07% The total cost of buying and then reselling an apartment. Includes:

* all transaction taxes and charges:
* lawyers' and notaries' fees
* agents' fees

Assumptions: The buyers are non-resident foreigners. The apartment cost US$250,00 / €250,000.
Cap Gains Tax: 33.00% Assumptions: The property was bought for US$250,000 / €250,000, and sold 10 years later, after a 100% appreciation.
Landlord and Tenant Law: Pro-Tenant Rating is based on a detailed study of each country’s law and practice.

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