According to new research by property consultants Savills, Irish expats living in the south east of England could tap into massive financial windfalls by returning to Ireland.

The study shows that the UK property boom, lower house prices in Ireland, and the strength of Sterling could combine to deliver an immigration dividend of over €500,000 to families returning from the UK. 

Commenting on the study Dr. John McCartney, Director of Research at Savills Ireland said;

“Amazingly, average house prices in Dublin were 16% higher than those in London back in 2008.  However the UK property boom has led to a 68% increase in average London prices which now stand at around £513,000.  Coupled with declining values in Ireland and the strength of the Pound, this means Dublin prices have fallen 61% behind those in London.

Consequently anyone who bought an average London property at the right time and now wants to buy back in Dublin would realise windfall gains of over €500,000 – not including taxes and fees.”

However Savills says that even expatriates who didn’t buy property in the UK could make big gains by coming home as cheaper housing in Ireland and the currency dividend on any accrued savings could be substantial.

Looking ahead Savills says that the strength of the economy and the coincidence of positive financial incentives should lead to faster in-migration from the UK;

"The latest CSO estimates show that in-migration to Ireland increased by 14 percent in the year to April, with more than 10,000 people coming from the UK.  Given the incentives that are now in place I would expect these inflows to accelerate.” 

However, McCartney warned that returning migrants are likely to put further pressure on the Irish housing market;

“It is widely accepted that we have not been building enough new homes to meet demand for some time now, and in-migration will inevitably put further strain on the housing stock. In the medium term it is difficult to see how this can result in anything other than continued upward pressure on prices.”

McCartney also noted that the returning Irish will be well positioned to compete for properties as many will armed with substantial amounts of cash.

Explainer

December 2008

• Individual owns average Dublin property outright

• Individual sells this property at the going rate of €371,647 

• Converts proceeds to £STG at prevailing exchange rate of €1 = £1.05 = £353,994

• Moves to London, buys average London property at going rate of £304,421

• Banks the change; £353,994 - £304,421 = £49,573

June 2015

• Sells London property at going rate of £512,651

• Adds proceeds to change from 2008 still in the bank = £512,651 + £49,573 = £562,224

• Converts combined sum back to € at prevailing exchange rate of £1 = €1.4 = €790,306

• Buys average Dublin House at going rate of €278,567

• Pockets windfall gain:  €790,306 - €278,567 = €511,739

Assumptions

• Numbers in chart are rounded for presentational purposes

• For simplicity calculations ignore taxes and professional fees

• Assumes no compound interest on bank savings

Sources

• UK House Price Data: ONS http://www.ons.gov.uk/ons/taxonomy/index.html?nscl=House+Price+Indices#tab-data-tables

• Irish House Price Data:  PTSB, CSO, additional computations by Savills Research

• Exchange Rates: ECB

https://www.ecb.europa.eu/stats/exchange/eurofxref/html/eurofxref-graph-gbp.en.html