Luck of the Irish

Country:  Ireland

Luck of the Irish

Falling property prices and tighter borrowing rules are deterring Irish property investors according to the latest survey by the Irish Banking Federation (IBF) and PricewaterhouseCoopers.

The value of loans fell to their lowest level in more than three years, and lending in Eire fell 37% in the first nine months of 2008 compared to the same period in 2007.

Irish buyers have spent at least 60% less on property according to Savills research. End of year figures will show that they spend around €15bn (£12.6bn) in 2008, down from €45bn (£37.6bn) in 2007 and down 73% from the peak of €54.4bn  (£45.5bn) in 2006. This huge decline in spending is most evident in the new homes area.

In the new homes as in the second hand market, prices have fallen by as much as 30% this year as the development of new homes has come to a virtual stand-still.

'We estimate that at most 25,000 new homes will be built next year. We expect that supply and demand factors have pushed prices close to the bottom and that by mid 2009, prices will have stabilised. What is needed then is a period of at least six months to a year of price stability to allow buyer confidence to be restored which will in turn increase activity levels,' said Joan Henry, head of research at Savills Ireland.

The Irish have traditionally been big players in the overseas property investment market in recent years, however, the current economic slowdown in Ireland is sure to have a knock-on affect.

Although on a more positive note, Savills project that the Irish property market will bottom out in 2009.