Economists warn of Brexit’s impact on Irish housing market
Economic and Social Research Institute expert says there will likely be ‘significant regional differences’ in how property prices react to Brexit.
Brexit is set to widen the housing costs gap between Dublin and rural Ireland, economists have predicted.
The economic fall-out will likely see income levels drop and unemployment rise in Ireland – factors that would dampen property price growth, experts from the Economic and Social Research Institute (ESRI) the told an Oireachtas committee.
But ESRI’s head of economics Professor Kieran McQuinn highlighted that while housing demand may drop elsewhere in the country, other Brexit consequences could see it rise in the capital city.
Giving evidence to the joint committee on Housing, Planning and Local Government, Mr McQuinn pointed to the number of financial workers that could relocate to Dublin if London’s banking sector was hit.
“The impact of Brexit on income levels and the labour market is fairly unambiguous – both are expected to be lower than a no Brexit scenario,” he told committee members.
“In this respect housing demand is likely to be lower due to both factors.”
One could see significant regional differences in the impact of Brexit on the Irish housing market Professor Kieran McQuinn
Professor McQuinn added: “But Brexit could result in large numbers of people moving to Ireland from the UK, particularly if there is significant fall-out for the financial sector in London.
“This could see an increase in the number of people coming to live and work, particularly in Dublin, which would increase housing demand.
“Therefore one could see significant regional differences in the impact of Brexit on the Irish housing market.
“The rest of country might be more adversely impacted while the greater Dublin area less so.”
The senior economist said supply of new homes could also be hit by Brexit – citing likely cost increases in securing labour and materials from the UK and potential difficulties accessing finance in a turbulent economic climate.
He said the supply of homes for lower income families could be particularly impacted.
“If Brexit were to result in a lower level of housing provided by the private sector it is important that the State continues to invest in affordable and social housing,” said Professor McQuinn.
He also predicted if disposable income falls post-Brexit more people will need to seek state assistance with housing costs.
Dr Tom Healy, the director at the Nevin Economic Research Institute, also gave evidence to the committee on Tuesday.
He said the potential impact of relocating London financial workers should not be overestimated.
Dr Healy said a potentially more significant factor would be the fact people in continental Europe who intended to move to the UK to find work might instead choose Ireland post-Brexit.
“They are more likely now, others things being equal, to move to the Republic of Ireland,” he said.