You may not know it, but a cross-border property invasion is taking place. As property prices in the Republic of Ireland stagnate, southern investors are cashing in on the huge potential in the Northern Ireland market. As a result, prices are soaring.

Nowhere has the impact been felt more than the north’s border regions. Newry in Co Down was revealed in October as the UK’s top property hot spot, with house prices increasing by 46% in the past year alone, from an average of £123,334 (€182,000) last year to £180,546 (€266,000) this year.

“The property market throughout Northern Ireland is booming, but in Newry it has gone crazy,” says John Lennon, owner of the Newry-based estate agents Town & Country Property.

“A lot of those buying houses in this area are from the Republic of Ireland and they would mainly be investors looking to rent the properties out. The end of the Troubles has certainly helped attract more investment.”

Lennon estimates that southern buyers account for half of all the investment properties his office sells in Newry. With investments accounting for a quarter of all sales, he acknowledges that this makes southerners the purchasers of more than 12% of all homes he sells.

“Ten years ago businesses would not have been interested in setting up here. There was a lot of doom and gloom about the future, but that has all changed,” says Lennon.

Southerners are buying three-bed semis and terraces in Newry from £170,000 to £200,000 (€250,000 to €300,000). These turn in rents of up to €850 per month.

This highlights one of the long-term problems about investing in the north — rents have tended to remain relatively low and therefore they often fail to service the mortgage repayments.

On a property worth about €300,000, the monthly repayments on a standard 25-year loan will approach €1,500, almost twice the €850-per-month rent.

However, it is capital value increases that buyers go in search of.

With Newry prices up by 46% over a year, those who bought only 12 months ago will have already have clocked up €150,000 in profit.

According to Lennon, southerners are now fanning out to nearby towns such as Banbridge and Rathfriland.

University towns such as Coleraine, with their steady supply of tenants, are another likely target.

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