We have all seen the headlines in the past summarising Ireland’s economic demise, headlines read “Fall of the Celtic Tiger” and “Europe’s Austerity Experiment”. However, despite times of hardship Ireland’s economy is turning a corner and over 2014 and 2015 we saw positive economic growth and also the return of increasing house prices.
In 2014 we saw double digit property price increases but in 2015 this reduced to 6.54% and in Dublin price rises slowed significantly to 3.35%. This slowdown is likely to have been caused by changes made by the Central Bank in controlling lending. Their efforts are attempting to minimise the reckless lending practices seen pre-crisis. Changes include:
- Loan to Value ratios limited to 80% on properties valued over €220,000
- Buy to Let Loan to Value ratios set at 70%
- Second property Loan to Value ratios at 80%
- Private dwelling lending limited to 3.5 x gross income.
Some experts have expressed concerns of another property bubble in Dublin. There is a significant shortage of properties in the capital. This is likely due to higher VAT on new properties and the simple fact that building properties is more expensive than the sales price a developer would receive. It will be worth keeping an eye on developments in Dublin but cooling prices will ease concerns slightly.
Ireland’s housing boom. Source: OECD
The outlook for Irish property prices is positive we will continue to see small increases over the next year. However, given the magnitude of decline previous many home owners will still be blighted by Negative Equity.
With the impending changes to the Irish Bankruptcy bill we expect the see many borrowers in arrears with unsustainable mortgage products and suffering negative equity utilise the new Bankruptcy protocol. It is a less harsh system and is a realistic option and will allow Banks defaulted loan books to move forward.
Finally, we are happy to report that Bell & Company’s Resolution team achieved a fantastic result with a core Irish lender last week. A couple had a significant shortfall of over c€100,000 on a buy-to-let property in Co. Cavan and this was settled on a Full & Final basis for €8,500.
If you have a property in Negative Equity in Republic of Ireland, Northern Ireland or mainland UK then please call us today on +44 (0)2895 217373 to arrange your free initial consultation. Our advisers are happy to host you here at Rosemary Street in Belfast City Centre or can travel given suitable notice. We look forward to hearing from you.