Plenty of green in Irish real estate these days

CLONBUR, Ireland — Mary Holleran was dumbstruck in 2000 when developers paid her $50,000 for the cottage where she was born in 1916. Her family considered the falling-down wreck of so little value they had been using it for decades as a cowshed. But now the cottage is the elegantly restored home of a Jaguar-driving Dublin advertising executive and is worth well over $500,000.

"These places were thought to be worthless in my time," said Holleran, 90, looking across a green field in the west of Ireland to the country cottage where she was born. "We were only counting the pennies then, but everybody has enough money now."

Tracing the country's spectacular rise from scenic basket case to economic powerhouse, Ireland's storied green fields are now among the most sought-after in Europe. The property boom has reached from one end of the island to the other, with home values on average soaring by 270 percent in the last decade, according to the government, one of the world's fastest rates. The average Irish house now goes for about $450,000; in Dublin, the capital, the figure exceeds $600,000.

In the United States, prices rose only 57 percent in about 10 years by a somewhat different measure, the median price of a single-family house, according to the National Association of Realtors. The figure of $147,100 at the end of 1996 had increased to $231,200 by this July, it reports.

With Ireland's population growing by more than 8 percent in four years — by far the fastest rate in the European Union — and incomes rising steadily as well, many people who are not used to feeling rich suddenly are.

"He almost went through the floor," said Don McGreevy, a real-estate agent in Westport, recalling the day recently when he explained to a farmer in his 70s that his 100 acres of farmland in County Mayo, in far northwest Ireland, was now worth millions. McGreevey recalled that the stunned man said to his wife: "Peggy, we won't live to spend it all."

Property prices have replaced weather as the most talked-about topic.

"It's gone cracked," is how Sean Holleran, Mary's son, described the real-estate market. From his front door, he still sees a spectacular view of the hills rolling down to Loch Mask, an island-dotted lake. But while he tends 100 sheep, legions have left farming and now young people want to join high-paying software and pharmaceutical companies. Country lanes that once only knew mud-caked tractors are now filled with new Land Rovers and Mercedes.

Holleran said his brother was offered a chance in the 1970s to buy an old farmhouse for about $400. "He thought it was a useless waste of time," Holleran said, wincing at the thought of the fortune it was worth now.

Fifteen years ago, Ireland had double-digit interest rates, stagnant growth and so few jobs that youths were migrating to the United States and elsewhere; homes were exceedingly affordable. Today, interest rates are rising but remain at a little more than 4 percent. Many of the Irish who left have returned, joined by a huge flow of Eastern Europeans moving here, all of whom are looking for places to live.

Low corporate-tax rates, a highly educated, English-speaking population and a strategic location at the edge of the European Union have led to massive foreign investment in manufacturing and services. Year after year, the economy has expanded at rates envied by most European countries.

A recent Bank of Ireland study concluded that among the eight largest countries in the Organization for Economic Cooperation and Development, Ireland has the second-highest per-capita wealth, about $192,000 per person. Only Japan was higher. The report said net wealth has grown 350 percent in the past decade, and 71 percent of that new money is invested in property.

Dan McLaughlin, chief economist at the Bank of Ireland, said that "this extraordinary housing boom" is likely to slow. But he said he did not believe, as some have said, that "it will all end in tears."

Yet plenty of people here worry that the young and poor cannot afford a house, that a crash in prices would strangle people with whopping mortgages, and that too many new homes are spoiling the look and feel of the country.

Each year, more than 80,000 new homes are being built, and a stunning one-third of all homes in the country are less than 10 years old.

"I don't think anybody can believe what's going on," said Andrew Hrehorow, a developer in Clonbur. "You get taken over by the high tide and carried along. When it does level out, people won't believe what they've done."

As the real-estate fever continues, many people are borrowing against equity in their suddenly precious homes, to buy still more property — including land beyond Irish shores. A new popular weekend activity has been attending property fairs such as a recent Portuguese housing expo in Dublin.

"Not a weekend goes by," McLaughlin said, "when you don't see a property fair in Dublin selling land from Bulgaria to East Africa."

"I just adored it," John Lyons, 57, said of the first time he saw the Hollerans' old cottage, which like many ancestral homes was left standing after the family built a more modern home nearby.

Lyons said he had been attracted to the area because of its excellent fly fishing. He decided to move here when he saw the cottage, which dates to at least 1846 and has limestone walls nearly 3 feet thick. He hired contractors to restore it and to build a one-story building with an office, a spare bedroom and a couple of stalls for his wife's horses.

"We've matured as a nation," said Lyons, who moved in full time in January and now runs his business here.

He noted that a century ago, when Ireland was under British rule, Irish were tenants on this land, not owners. Now, he said, many Irish own not one, but two homes.