The Irish mania for property investment continues, despite everything
25 June, 2013
The profile of Irish investment preferences discovered by Barclays Bank in preparing their latest issue of Wealth Insights is depressing. According to press reports, their research shows that Irish high-net-worth individuals (HNWIs) hold an amazing 55 per cent of their wealth in property, despite the collapse in property values in the past 5 years. This is a higher proportion than any other nationality. Irish HNWIs also hold 18 per cent in cash, 16 per cent in financial investments and 7 per cent in assets such as collectables. And just how much private wealth do you think is invested in enterprise or business, the sector which is arguably the most vital to our economic future? A pitiful 2 per cent.
A long legacy of under-taxation of property assets and transactions, only partly being addressed now, is an important factor in this mis-allocation of investment funds. We all continue to pay a price for past policy failings in this area.
Historic factors are often also quoted as an explanation for our obsession with property. There is a pithy phrase in the famous Vanity Fair article by Michael Lewis (“When Irish Eyes Are Crying”) about how we crashed our economy:
Irish people will tell you that, because of their sad history of dispossession, owning a home is not just a way to avoid paying rent but a mark of freedom. In their rush to freedom, the Irish built their own prisons.
That sums it up nicely.