Lucrative yields to lure investors back
Property investors may soon be attracted back into the market as yields for houses in some parts of Dublin city area are creeping up to the lucrative 7pc level. Karl Deiter of Irish Mortgage Brokers, recommends that investors with cash should consider buying centrally located houses which are asking around €180,000 as these can generate rents of around €1,050 per month which works out at a yield of around 7pc.
However he cautions investors when it comes to buying apartments. "There are lots of apartments around but nobody is building houses in the central areas of Dublin so houses are attaining a scarcity value. Having one's own front door entrance is as big an attraction for renters as much as for buyers," he adds.
He refers to the Ringsend area, as an example, where 62 homes are available for rent but only about 15pc of these are houses. Such demand will reassure investors as, Mr Deiter believes, rents for houses are unlikely to fall as much as those for apartments. "I believe that rents for houses will not go below €900 per month," he adds.
Another concern facing investors is the prospect of rising interest rates as banks increase their margins. He points out that this is not a concern for cash rich investors who are availing of the current downturn to increase their portfolios. "Afterall banks are also expected to reduce their deposit rates so investors will see little attraction in leaving their money in the banks," he adds.