Author: Parmdeep Vadesha Added: June 30, 2008
Copyright (c) 2008 Parmdeep Vadesha With the current property values continuing to fall in Ireland, is now a good time to invest in Irish property? Bad news for some and good news for others, the value of property in Ireland are showing signs of a decline. In the last part of the 1990s, Ireland has significantly grown in terms of price and promise. The Irish property market has been increasing at an average of 15% annually since 1996. Now, the market is showing signs of a slowdown as property prices experienced a nationwide drop as of late last year. Propertywire.com illustrates the rapid fluctuation of the Irish property market. In 1996, the price of an average property was around €75,000. At the peak of the property boom in 2006, the same property was worth over €300,000. But as of this year, the average price of a home is around €289,000, a fall of around 5%. Sellers are currently pricing their property at an average of 12% below their value in 2006. The property slump and economic recession in Ireland is similarly felt in many parts of Europe. Some demographic and economic factors are believed to have contributed to this trend. For one, many young Irish graduates have migrated to the neighbouring EU countries to seek employment. Also, when Ireland changed its currency in 2000, the Euro interest rates were lower compared to the previous Irish interest rates. This caused the property values in Ireland to initially increase as more Irish were willing to borrow money. Over time, there came a point when the residential mortgage debt reached undesirable proportions. With these and some other factors, Irish property showed growth and promise in the early part of the millennium and, true to the prediction by the International Monetary Fund, that trend was superficial and unlikely to last long. By 2006, property prices were starting to fall. As of last year, Ireland is one of the poorest performing property markets in Europe. This pronouncement is evidenced by indicators of property related transactions. For one, Homebond reports that there were only about 1,100 homes constructed in the whole country for the month of February this year - a 65% drop compared to last year's figures. Homebond is a national organization directed at providing home buyers with information regarding the property market. The figures that Homebond provides are considered by economists as a reliable indicator of property trends. However, it is not only the property market that's experiencing a decline in value. Price and demand has fallen in all other sectors, most especially in those enterprises related to the property industry. For example, concrete manufacturers have reported a sharp drop in profits, which they attribute to the very few new houses constructed each year as well as the stagnant local property market. Home prices have fallen and are expected to further decline in the coming years. Because of this, potential home buyers are holding out, skeptical to invest with the current uncertain price fluctuations. In Northern Ireland, and similarly in England and Wales, home values and the number of property-related transactions have dropped. The length of time it takes to sell a property in Ireland is currently at its all-time longest, at 8.5 weeks. For many property investors, the length of time it takes to unload a property is a very good indicator of the market's true state. Economists believe that the property slump in Ireland is due to the lack of consumer trust in the property market. People are still not purchasing homes and investment, until they can finally determine the direction of the Irish property market. Some investors are waiting for the prices to drop low enough to obtain a true bargain whilst others are making very low offers to pick up distress sale bargains.
--- Parmdeep Vadesha is a property investment expert and founder of the largest community of property entrepreneurs on the web who buy below market value properties from distressed homeowners facing repossession, divorce and bankruptcy. He writes a monthly newsletter for over 70,000 property investors worldwide - http://www.Property-System.com
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