Vulture funds are contributing to double-digit growth in prices for two-bedroom apartments in rural Ireland as they believe there is better value there, the latest property industry report concludes.
The Institute of Professional Auctioneers and Valuers (Ipav) residential property price barometer for the first half of the year shows apartments in some counties registering gains of more than 10 per cent in just six months.
The largest increases were in the price of two-bedroom apartments in Westmeath (up by 14.4 per cent), Offaly 13 per cent, Donegal 12.69 per cent and Kilkenny by 12.3 per cent.
Prices have been on an upward trajectory since the third quarter of 2023 with overall prices for two-bedroom apartments and three and four-bedroom houses in the first six months of 2024 up over 5 per cent on those of the latter half of 2023 and over 8 per cent in the year to September.
Apartments experienced higher levels of increases than houses, even though coming from a low base, and this is nationwide with the exception of Dublin.
Ipav chief executive Pat Davitt said institutional/commercial investors are beginning to move outside of the Greater Dublin Area seeking properties that can command market rents, as opposed to those with capped rents.
“This is creating more competition in the marketplace with the investor winning in bidding wars as they can place these properties in the rental market. We have seen evidence of this in the most recent Daft.ie report. It presents another obstacle for the first time buyer attempting to acquire a home,” he said.
Mr Davitt said rapid population growth, up by almost 100,000 in the year to April, was fuelling demand for housing. There is also increasing evidence of non-Irish nationals buying homes.
Yet many people are reluctant to put their homes on the market because they are fearful that they will be left without a place to live.
The lack of new homes led to 67 per cent of first-time buyers purchasing second-hand properties in 2023 and many more all over Ireland buying apartments as they are the cheapest and most affordable.
Mr Davitt said the Help-to-Buy and the First Home schemes are very successful, but need to be extended urgently to second-hand home purchases.
In the barometer report, the property commentator Donal Buckley said the strongest house price growth was in parts of the country where property prices are lowest.
Prices in Donegal have increased by 12.69 per cent for apartments, by 10.16 per cent for three-bedroom houses and by 11.6 per cent for four-bedroom houses.
He noted that investors who bought a two-bedroom apartment in Tipperary or Longford in 2017 would have doubled their money by now. If you bought the same apartment in Dublin 4, it would have only increased in price by 34.7 per cent.
Four of the Dublin markets showed the weakest price growth for apartments: Both Dublin 2 and 18 prices rose by only 2.33 per cent to €440,000. South county Dublin, which includes much sought after areas such as Dún Laoghaire and Killiney, saw prices for apartments rise 2.5 per cent to €411,000.
Dublin 15, which offers the second cheapest apartments in Dublin, also saw a relatively weak rise of 2.5 per cent. The cheapest apartments in the capital are in Dublin 24 which includes Firhouse, Tallaght and Jobstown, where they rose by 5.37 per cent to €261,667.
