Community and character: Financial Times

Posted on July 4, 2008 · Posted in Financial Times

Community and character

By Paul Gosling

Published: July 5 2008 01:07 | Last updated: July 5 2008 01:07

With miles of empty silver beaches, several of the best golf links in Europe and house prices a third of those in Dublin – Donegal has, understandably, become a favourite for second-home owners. And after a sustained period of depressed prices in the region, there are now signs that the property market is beginning to bounce back.

Donegal has the longest coastline of any county in the Irish Republic and can offer property investors peninsulas, bays and loughs stretching along its Atlantic shore. Near Portsalon, on the Fanad Peninsula, there is a mile-long beach that has been ranked by one national newspaper as the second best in the world – beaten only by the Seychelles – and some of the best surfing in Europe can be found at the seaside town of Bundoran and at Pollan Bay at Ballyliffin, on the Inishowen Peninsula.

Both the sea and the county’s rivers are popular for fishing, resulting in many excellent fish restaurants. Golf is also a draw, with seven links listed in the top 50 courses of Britain and Ireland, including two at Ballyliffin, two at Rosapenna, one overlooking Donegal Bay and a nine-hole course on Cruit Island. Each has spectacular scenery.

Former UK national newspaper editor Roy Greenslade is among those who have been attracted to the area. “The people are fantastic,” he explains. “They have the sense of community that has broken down in Britain.” Greenslade bought a home in Ramelton, on the Fanad Peninsula, just under 20 years ago and lives there during the summer months.

Keith Anderson, whose estate agency is based in Donegal town, agrees that it is the county’s character that attracts outsiders. “It’s a friendly area,” he says. “It’s a rural area, really. There is no real crime here. It’s quiet. And there are a lot of sports clubs. You have the beaches and golf courses on your doorstep. We have an awful lot of people coming from England to retire.”

Lewis Boyce, of estate agency DNG Boyce Faulkner, explains that in the past decade house prices have risen in line with the strengthening economy of nearby Northern Ireland. “Ninety per cent of buyers are from Northern Ireland, mostly for holiday homes, plus some cross-border relocation,” he says.

According to the national Ireland house price index published by Permanent TSB, prices in Donegal rose from an average of €61,463 in 1996 to €223,237 10 years later.

But the strength of the euro, the weakness of sterling and a general lack of confidence in the property and financial sectors have led to significant falls in property values in recent months. Estate agent Paul Franklin says that in the area around Letterkenny house prices have fallen by 12-15 per cent since their peak last summer. In the Atlantic coast region, of more interest to retired and second-home buyers, Franklin reports price falls of 20-25 per cent. A house that would sell for €1m in Dublin can now be bought in Donegal for €350,000-€400,000, Franklin suggests.

One of the most spectacular properties on offer is that of novelist Edna O’Brien. Her Pink House, at Carrickfin on the Atlantic coast, is on the market at under €750,000, has four bedrooms, two living rooms, an acre of grounds, direct access to the beach and sea views from all windows. It is modernised, with original stone floors. A three-storey country mansion in two and a half acres at Kildrum, initially on the market last year at €1.5m, is now being sold for under €795,000.

By contrast, on the opposite side of Donegal, at Greencastle on the Inishowen Peninsula, is a new development. Apartments and town houses adjacent to a Napoleonic-era Martello tower, sited directly above Lough Foyle, are available at prices ranging from €350,000 for a three-bedroom apartment to €475,000 for a three-bedroom townhouse.

While these homes would have sold for much more last year, Franklin says that there are signs that the market has bottomed out, with an increase in sales compared with the early part of the year.

“In the last month or so, properties have been beginning to move again,” he says.

Price recovery is being helped by stronger planning controls that are restricting the building of new properties. The county’s development plan deters building that will damage the landscape or that will increase the number of holiday homes, favouring applications from local people. It is now difficult for outsiders to purchase new properties in many locations.

An increasingly strong local economy is another factor that seems to have prevented house values falling too far. And Donegal is now finding its own economic direction, with Letterkenny not only the largest town in the county but also one of the fastest-growing in Europe.

According to Toni Forrester, chief executive of the Letterkenny Chamber of Commerce, the town’s economy is doing well and will continue to do so, whatever happens in Dublin: “We are very upbeat. Letterkenny is very vibrant and confident. We didn’t have the highs of the Celtic Tiger here, so hopefully we won’t get the lows. People are still building and renting commercial buildings, taking speculative commercial decisions. We have a young population that wants to do business.”

Although Donegal is relatively isolated from most of the Irish Republic, this sense of isolation will be reduced by a major new cross-border road upgrade, linking Dublin with both Letterkenny and Derry and scheduled to be completed within five years. “Our links to Dublin have improved a lot over the years,” says Forrester. “But [the road] will make connections even quicker.” Donegal already has good air links to Britain, via nearby Derry airport and also from Belfast’s airports, a couple of hours away.

However, Forrester concedes that more needs to be done to raise the standard in terms of electricity supplies, broadband and water quality. But, for the time being at least, the financial price is a very attractive one.

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Estate agencies

Franklins Estate Agents, tel: +353 (0)74 91-88000, www.franklins.ie
DNG Boyce Faulkner, tel: +353 (0)74 91-29188, www.boycefaulkner.com
Anderson Estate Agents and Auctioneers, tel: +353 74 97-22888, www.anderson.ie