How will Brexit affect the Ireland housing market? A question wondered by many citizens in Ireland, especially those currently active in the housing market.
Though not all bad, the housing market could be negatively impacted by the loss of international buyers.
As the nation watched as the British pound lost value by 10% with the referendum result being announced, and has dropped even more since then, housing in Ireland just got significantly more expensive for British buyers.
With current housing prices already being considered too high, for all buyers, international or not, the prospects of buying just got much more difficult for anyone newly searching.
The Irish Times reported recently that 60% of buyers of top-end homes are international, while 40% being more specifically from the UK.
By top-end homes, the Times is reporting numbers of €1 million and over homes. Meaning, the rest of the market, while without statistics from the Irish Times is also highly diluted by foreign investors.
Citizens looking to permanently move should not have much of an impact in their quest to buy as it is a permanent decision. People in which Brexit will impact will be home buyers buying the top 1% of homes and those buying investment properties.
The reasoning being that the top housing market is already seen as highly expensive, and a 10% increase in their current prices will cause even the richest of foreign buyers to fail to meet the income requirements of someone able to purchase such a home.
As for investment properties, buyers will search elsewhere to put their money as the investment value will have decreased significantly and fail to be the best option for buyers.
With Brexit recently being passed, it is also expected that many buyers will have a hesitancy toward purchasing in the current unstable market.
As Ireland has already been battling with a waning market, depletion of buyer confidence is the last thing the market needs.
As a decrease in Irish homebuyers due to increasing prices and the shortage of homes is on the rise, it is possible this only gives one more reason for local buyers to pull out of their buying search until the market is beginning to stabilize.
Like I said, not all bad is to come from this, however.
David McWilliams, an economist, argues that “Britains loss is Ireland’s gain”. How so?
He believes that Ireland will begin to act as a base of operations for newly developed companies.
It is already forecasted that the next base for a google and facebook locations will be brought to Ireland. Two major companies in operation worldwide is a major success to the Irish economy and will have almost immediate impacts.
When companies are looking to be based in the EU, it is probable they will look to Ireland as a place put down their roots. If McWilliams is right, thousands of more jobs and investment will be brought to the country to stimulate the economy.
A stimulated economy leads to a stabilized housing market.
