What does Brexit mean for the Irish Property Market?
Whilst there are a number of schools of thought regarding the effects Brexit might have on the Irish property market, it is fair to say no one can be completely sure what the fallout is likely to be, good or bad.
History has taught us that when uncertainty enters into the financial markets, one the first sectors to be affected is the property market.
So if we were to look at possible negatives; an adverse effect on consumer confidence may well occur with the potential knock on being a slowing down of the property market. However, when this happened before, we were in a very different place with oversupply and overpriced property. Irish property today still represents good value and undersupply of property ensures demand is plentiful.
Last year saw a large number of UK buyers of country property taking advantage of the strong sterling rate so the initial shock reaction to Brexit, causing a weakening of sterling could lead to a reduction of UK buyers in the long term. However demand from international and American purchasers has increased significantly this year. With both the Euro and Sterling feeling the effects of Brexit, international buyers could view this as a time to change their foreign currency.
Brexit may even have a further positive impact as firms transfer high value roles from London that require a European base to Dublin which would boost demand for higher-end residential product."
Interest rates in the Euro area are now likely to remain low for longer than previously expected. This, together with lower than expected returns on alternative assets like deposits and bonds, will help purchasing power. In addition, the prospect of prolonged low interest rates should continue to attract investors into bricks and mortar.
So overall, with the exception of added uncertainty, it is still very difficult to measure the effect Brexit will have on the property sector here. The reality is this may only crystallise when the full terms of the UK's exit from the EU emerge.