Irish owners at risk of losing thousands on properties abroad
Newly fluctuating currency differences and the threat of bursting property bubbles in a number of heated markets are putting Irish property owners abroad at risk of losing tens of thousands of euro.
It means that Irish emigrants who own property are facing a "do or die" decision to save their investments if they bought in regions where prospects are now at risk as the fallout of the China crisis kicks in. At the same time, a strengthening euro is beginning to erode recent historically high currency benefits for those selling there and buying here.
Irish property owners in the UK, US, Canada and Australia are all holding properties in countries where prices have been rising steadily for most of decade and where at least two of these economies now believed to be facing burst bubbles.
UK property prices have commenced falling after peaking in May and there is speculation over there that London in particular is heading for a burst bubble after years of surging double-digit inflation which has left the average home price in that city peaking at over stg£400,000.
On top of this, clampdowns on Russian investment, on corrupt officials in China and a pledge to tax wealthy foreigners have turned many of the globally super wealthy off buying there.
In Australia, where it is estimated that more than 100,000 Irish citizens are now living (among them a core of unemployed who left here since the crash), city property prices are among the highest in the world after a decade of steady inflation.
Sydney properties now average AUD $1m, or close to €640,000. Much of Australia's wealth has been founded on supplying mined products for China's now ailing construction industry and Chinese buyers have featured strongly in its city markets. Many are now expecting Australia's property market to bomb hard.
Meantime in New York, a 900sq ft house in Brooklyn, bought in 1989 for US$150,000, is being advertised today at €1.25m. After 20pc rises in New York last year, many economists there reckon that the threat of rising interest rates will poleaxe that market next year.
For some time, Irish people based in the US and the UK have been taking advantage of high UK and US property prices versus fallen Irish prices to sell there and move back here.
On top of this, historically strong sterling and dollar differences against the euro have also leveraged their buying power massively back in Ireland where prices are rising but still stand at more than 40pc cheaper than they were at the height of the boom. While property prices were falling in Ireland, they have been rising steadily in all of these countries.
Property and mortgage pundit, Karl Deeter, said: "As we found out ourselves, the sort of soft landings of the sort being talked about in Australia at the moment just don't happen. Every economy, no matter how different they do things, is subject to the property cycle.
"I'd advise those people who own properties in countries which are believed to be at the top of the cycle to do their homework and perhaps consider selling up, buying with cash in Ireland and continuing to rent where they are living. But only after doing their homework."
There has already been a steady flood of smart overseas-based Irish buyers back into Ireland in recent years, particularly at the top end of the market.
Estate agents in Dublin have estimated that up to 40pc of top-end property in some areas have been purchased by Irish people based abroad in the last few months, principally those in the UK and the US. Such buyers have also acquired most of the top-end country homes sold here in the last year.