The Irish Property Market Untangled
I last reported on Irish real estate in this letter in 2011 when properties were rumored to be selling for as much as 50% off their Celtic Tiger values.
At that time, rumor was all we had to go on. Asking prices were, in most cases, still at their peak level. Sales were slack. But those sales we heard about were reported to be far lower than their original asking prices.
Though it was starting to get interesting for a foreign buyer, you’d have had your work cut out for you trying to figure a property’s worth and make a reasonable offer–without being ripped off.
Thanks to two recent changes, today’s buyer is in a far better position.
First, the introduction of the Residential Property Price Register in 2011 means you can go online, select a county of interest for your chosen period (from the last three years) and presto…a record of all local sales, along with their actual selling prices. That makes for a whole lot less guess-work.
The second change is Ireland‘s long-coming property tax, finally rolled out this year. From the days of the Celtic Tiger when everyone proudly watched their home values climb to ridiculous levels, it’s now in everybody’s interest to keep those values down–and minimize their annual tax return.
All of this has helped restore some normality in the market. The asking prices you’ll see in realtors’ windows and on websites today are far closer to reality. Most of these are 50% or less the asking prices six years ago–though, I’d say you still have some bargaining power.
Distressed property is still going under the hammer once a quarter at the Shelbourne Hotel, Dublin. Managed by UK group Allsop Space, the catalogs are mostly filled with new-builds in half-occupied developments, architecturally-designed homes by developers who ran into financial difficulty, investment apartments (again, overbuilt), and commercial properties. In other words, you won’t come across too many traditional or character properties. Still, it can be worth keeping an eye on, even as a further indicator of local property values.
Be careful, though, not to be influenced by what a property may have been flaunted on the market for five years ago. A realtor may tell you that the 260,000-euro, five-bedroom property on an acre, in a stunning location overlooking the sea, has been dramatically reduced from 600,000 euro. That first price was severely inflated. What the owner is now accepting is far closer to reality. In other words, I wouldn’t call the Irish property market a bargain basket. It’s just finally back to normal.
So, should you decide to buy a home on the Emerald Isle, how much will you owe in property tax?
That depends on the bracket your property value falls within on the property tax schedule. There are 20 brackets on the table, with corresponding fixed charges.
To give you some idea, the lowest amount payable is 90 euro for property valued at under 100,000 euro. A property worth 500,000 euro will be subject to 855 euro annually. And, if your home is worth more than 1 million euro, you’ll pay 0.18% tax on the first million and 0.25% on the balance.
The tax was introduced late this year, so Irish property owners must only make a half-year payment for 2013. From 2014, we’ll pay the full whack. It’s up to each owner to determine the correct assessed value. More information from the government’s Local Property Tax Guide.