High Housing Costs Erase the Smiles in Irish Eyes
This town where the Boyne and Blackwater rivers meet was long a byword for nowhere special, a rural crossroads where the smells of silage and horses rode on the breeze.
But these days, Dublin urbanites are tripping over each other to move in. The rush is transforming the town into a suburb just 25 miles from the capital, though more than an hour’s journey over congested roads.
This invasion is repeating itself in every direction of Dublin, the eye of Ireland’s storming economy. Housing prices have tripled in the most sought-after city neighborhoods and driven young couples like Jim and Anne Maguire into the sticks.
“I miss Dublin already. I think I might go bonkers out here,” she said, looking at plans for an unbuilt three-bedroom townhouse priced at 175,000 Irish pounds, or about $190,000, and offering views of a similarly bland development across the road.
“Ah, but our mortgage will be sane,” said her husband, rocking their year-old sleeping son, Sean, on his shoulder.
Though a godsend for Ireland’s swaggering investor class, rapidly escalating real estate prices and the advent of an American-style commuter culture are troubling for broadening swaths of Irish society.
“A decade ago, I was living on practically nothing in the center of Dublin in fairly scruffy digs. You took the bus or more likely walked, and you didn’t care if it was raining, because everybody else’s hair was wet too,” said Ned Mahony, a software engineer, speaking on his mobile phone while stuck in rush-hour traffic.
“Now I seem to spend all day in my car, and it’s a very nice Alfa Romeo, thank you. I might have cappuccino and a baguette for lunch instead of the chips and pint from my university days. And I feel like I’m living in the 51st state of the U.S.A. instead of Ireland. I’m wealthier, but in some ways I was happier then.”
The rapid changes are most shocking to those who emigrated by the tens of thousands in the late 1980s and early 1990s, when Ireland’s unemployment was in the teens and life was slow. They’re returning now from New York and London to a homeland where white-collar jobs are plentiful, but hospitality has given way to status-consciousness and cutthroat modernity.
“It’s awful. People have become so greedy, so calculating, so selfish,” said Bairbre O’Malley, a veterinarian who spent the last nine years caring for exotic pets in London and is establishing the same kind of practice here.
“When I was riding the Underground in London I’d often see people being rude to each other and [I’d think], ‘This would never happen in Ireland.’ But I’m home now, and it is happening. I ride the DART [Dublin Area Rapid Transit] train home and see the most appalling behavior. You’d need to be a rugby player to handle all the shoving.”
O’Malley, 33, has lived with her parents for six months in the southern suburb of Bray. She’s quickly found she doesn’t have enough income or savings to buy a place she’d like.
“I always had dreams of coming home and buying a cottage in Clonskeagh,” she said of her native Dublin district. “They’re half a million now. I have lots of friends in the same boat: looking, looking, all depressed.”
The Irish traditionally are obsessed with owning their homes. Just 9% rent, the lowest percentage in Europe.
“The dilemma is there’s no alternative in Ireland to buying,” said Cliodhna O’Donoghue, who edits the property section of the Irish Independent newspaper and co-anchors the “House Hunters” show on television. “The rental sector is in twice the crisis.”
As prices rise, so does labor unrest. The country suffered 39 strikes last year, the most since 1992. So far this year train drivers, nurses, teachers and airline stewards have all joined the picket line--all citing the impossibility of securing a mortgage as a top complaint.
“We’re out here looking in Navan simply because with a combined wage packet of 40,000 pounds a year, the banks will give us a maximum mortgage of 120,000. That’s enough to buy yourself about a third of a house in Dublin, and I don’t think they let you do that,” said Maguire, a teacher who spent six weeks on strike this year.
Ireland’s boom rode an American-generated wave. Although Ireland represents just 1% of the population of western Europe, it attracts a quarter of all U.S. corporate investment to the continent. Two-thirds of computers sold in Europe are made in Ireland. Pharmaceuticals and financial services are also major draws for highly paid immigrants.
But even they suffer sticker shock when looking for a Dublin home.
“I followed the case of one poor Canadian fellow who was assigned to Dublin to work, for a pretty high wage,” said O’Donoghue, the real estate editor. “Somewhere back in the Toronto area he’d had a 4,000-square-foot house on three-quarters of an acre, but he couldn’t afford to buy a three-bedroom semi-detached in south Dublin.
“In the end, he opted to go back to Canada purely because of the property market.”
Some economists warn that Ireland’s exceptional exposure to U.S. economic fortunes could spell recession. Those struggling to get their foot on the property ladder are hoping this might happen and the property bubble will burst.
The International Monetary Fund recently warned that the price increases appeared unsustainable: “No industrial country in the last 20 years has experienced price increases on the scale of Ireland without suffering a subsequent fall.”
But Dan McLaughlin, chief economist at the Bank of Ireland, said Ireland needs to attract more immigration to keep its economy going, and with home-building lagging demand, he forecasts a 15% rise in housing prices this year.
“Ireland is getting off lightly from the U.S. slowdown because we’re seen as an efficient, low-wage and low-tax environment,” he said. “Many of the American multinationals with operations in Ireland would be likely to cut back their U.S. operations before their Irish ones.”
And because Ireland belongs to the European single currency, interest rates are stable.
“It’s hard to find anything that would cause a major crack in the housing market,” McLaughlin said.
The boom has spawned a class of fearless entrepreneurs, who borrow to the hilt to grab as many properties as they can, either to rent or sell quickly. Few are conscientious landlords.
“I don’t care what anybody says, these properties are going up another 15% this year,” said Seamus McCaghy, who proudly whipped out a check for just over $300,000--payment in full for his latest apartment purchase in Drumcondra, where a former Roman Catholic convent is being transformed into yuppie flats and townhouses.
A decade ago, McCaghy ran a pub and dealt in scrap cars, then took a gamble on property. He bought rural North County Dublin land for 600,000 pounds, and estimates it’s now worth more than 14 million pounds, or more than $15 million, “because it’s the Dublin suburbs of tomorrow.”
The banks agree and have allowed him to borrow heavily to build an impressive property portfolio. A derelict string of flats bought from Dublin city council for 800,000 pounds has become a 20-flat complex worth 3 million. He rents them, often in the names of his sons or daughters for tax purposes, to young immigrants from continental Europe.
The alarms go off accidentally at night, and the elevator rarely works, but McCaghy says that’s tough. He’s too busy acquiring more properties.
“If people don’t like it, they’re free to move,” he said as he climbed back into his brand new Mercedes.
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Irish property listings:
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