Collapse In Ireland Creates Two Current Opportunities
When we moved to Ireland in 1998, we rented for some time before finding the house that met our criteria and that we wanted to buy. As we recommend to anyone moving to an unknown destination, rent before you buy. The transaction costs overseas can be killer so getting your purchase right the first time is critical…and renting is an important step in the process. It allows you to check out different areas of town to determine where you really want to settle.
We arrived in Ireland thinking that we wanted an old townhouse in the center of the city. After we got to know Waterford a little, we realized that, in this context, town life didn’t make sense for us. What we really wanted was land. Our daughter wanted a horse, and Kathie wanted big, a long-term project. We switched our search to country houses and eventually found a great Georgian place that had been semi-renovated by an Englishman. It sat on 6 acres with outbuildings and plenty of room for a horse or two.
We were still hesitant to buy, though, as we were sure the Irish real estate market must have been at a peak. We thought prices were high when we arrived, then we watched as they increased further, steadily, during the months we rented and shopped. Still, we had a new baby on the way and decided to buy nevertheless. We realized we’d be staying put for a while and would be able to amortize the high costs of buying in Ireland over several years at least.
Over those next several years, the real estate market in Ireland continued up and up and up. It was a self-fueling spiral, as farmers sold at big prices to developers then put their money in the banks for the banks to lend to the developers’ buyers. This continued for years, much longer than we imagined it could.
As they say, it’s better to be lucky than good. And, in Ireland, we were lucky. Just at the height of the Celtic Tiger bubble (something we can identify now only in hindsight), we decided to sell our house in Waterford and take that money to buy an apartment in Paris. We sold very high (for nearly three times what we’d invested)…yet turned around and paid about 20% more for our apartment in Paris than what we’d just sold the house for in Ireland. For that sum, we got less than one-quarter the space. On the surface, not a sensible exchange of values.
But we didn’t move from Waterford to Paris for value reasons, at least not those kinds of value reasons. We moved to Paris because our daughter wanted to finish her last two years of high school in France. (My wife and our daughter can be very persuasive.)
That’s another story. Here’s my point right now…
A friend still living in Waterford forwarded me some current property listings from that part of Ireland, including one for a house in County Kilkenny, the next county over from Waterford. When I saw the picture, I thought for a minute I was looking at our old Waterford place. The two houses are nearly identical (Irish Georgian), except this one in Kilkenny has already been fully and nicely renovated and has a third, dormer story.
The kicker is the price. The price of the Kilkenny place is about the same as what we paid for our slightly smaller, not really renovated Waterford property back in 1998.
Has the Irish real estate reached bottom? After having waited eight years, years ago, for the top of this enigmatic market, I’m reluctant now to place a wager on its future, but I think the bottom must be near when you can buy a 5,000+-square-foot stone country house, fully updated, with new kitchen and new bathrooms, on some land with orchards and outbuildings, for €310,000.
That is, Ireland seems again a market of opportunity. While I wouldn’t expect any capital appreciation in the next five years at least, historic older properties in good shape should keep their value long term, especially if you buy in the better areas.
But this turn in the Irish property market presents, in my mind, two opportunities more interesting than capital appreciation. The first is for a second home. Anyone wanting a foothold in Europe or a piece of the Auld Sod should be looking now. Plant a foot in Ireland and make use of the low-cost airlines in Europe to explore the Continent.
The second opportunity would be to buy an inexpensive place somewhere in Ireland to call home as you establish Irish residency with the ultimate goal of gaining Irish citizenship. Establishing legal residency in Ireland isn’t overly complicated or expensive, and, after 60 months of legal residency in the country, you can apply for Irish naturalization.
Whatever your goal, Ireland’s real estate market qualifies as very interesting right now.
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