Sunday 25 February 2018

Donegal: Starter home sales ease Donegal's Brexit pain

3 Oakpark Drive, Woodlands, Letterkenny, was sold last September for €480,000
3 Oakpark Drive, Woodlands, Letterkenny, was sold last September for €480,000

The Donegal property market is another Brexit casualty, with lower interest in holiday homes from buyers across the border amid sterling's reduction in value against the euro. However, demand from locals for starter homes in Letterkenny and from Irish buyers for holiday homes more than offset losses from Northern Irish buyers.

Joe Reynolds of Property Partners Paul Reynolds & Co in Letterkenny says, "There's not the same interest from the North for holiday homes in Dunfanaghy, Rathmullan and the Downings peninsula, so that market is down 10pc to 15pc. Sterling doesn't have the same purchasing power as it once had."

That said, the price of an average three-bed semi-detached property across the county is up 11pc to €168,000 and is expected to rise by 10pc in 2018.

The northern and southern halves of the Donegal market are quite disparate, with prices mostly rising in the south - albeit from low levels - due to demand from Irish buyers for homes in the popular surfing village of Bundoran.

"Donegal is a bit like Ireland in that most of the activity is around Letterkenny and Donegal town but there is little activity in the rural areas," Reynolds says.

Cormac Meehan of Sean Meehan & Co says holiday-home sales from the North were flat in Bundoran in 2016 right after the UK voted to leave the European Union, and through last summer because the town (which relies on tourism) has traditionally seen many buyers from Enniskillen, Strabane, Derry and Omagh. The decline in sterling has made Bundoran property up to 20pc more expensive for Northern Irish buyers, though the currency is now at a "tolerable level".

Around 40pc of all sales are of second homes in Bundoran, which attracted plenty of demand from Irish buyers and retirees last year. But the lack of new builds for these buyers has pushed up prices for existing stock.

Reynolds says he has encountered the same problem in Letterkenny and Donegal town. "House prices are still so low that builders will not go back building because they won't it at a loss.Building costs are more expensive than they were 10 years ago because of the cost of adhering to energy-efficiency rules.

"There have been no new developments in Donegal town in the last 10 years, though there is one developer in Letterkenny who has been building three- and four-bed semis, with the latter costing €165,000."

The demand for homes in Letterkenny is coming from employees at various multi- nationals and workers at Letterkenny University Hospital.

Irish Independent

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