Wednesday 22 May 2019

Mark Keenan: 'Late Brexit bedlam breaks out among UK-based buyers'


The window has all but closed: With London property prices teetering and a final Brexit date looming, UK-based buyers are probing for Irish boltholes
The window has all but closed: With London property prices teetering and a final Brexit date looming, UK-based buyers are probing for Irish boltholes
The window has all but closed: With London property prices teetering and a final Brexit date looming, UK-based buyers are probing for Irish boltholes
Mark Keenan

Mark Keenan

Your anxious Brexit buyer in Ireland is typically an Irish ex-pat who today owns a house in the London area and is now worried about its value. He or she wants to sell there and buy here and is looking to spend in excess of €500,000 on a one-off house in a rural Irish location; but the exchange rate (86c per Stg £1) is softening.

What to do? Just like the British Parliament, many are dithering. At this late hour for Brexit, most parts of Ireland are now experiencing a surge of anxious Irish ex-pats and Brexiting Brits looking to come and live here; or at least to buy an Irish property, so that they can move over in the near future.

A good measure of Brexit bedlam in the Irish property market comes this week courtesy of the Real Estate Alliance (REA) network, whose member firms countrywide have just participated in a Brexit buyer survey at the request of Irish Independent Property.

The results show that a whopping 74pc of REA firms report an increase in interest from British-based buyers in the last 12 months while sales to UK buyers have risen by 12pc on average in the year.

It shows that more than one in 20 homes offered for sale are being sold to a British-based buyer (suggesting around 3,600 British bought properties over twelve months). "UK buyers now make up 10pc of overall enquiries and 6pc of sales in the Irish market, with our agents reporting an average of 4.3 sales to UK buyers," said REA spokesperson Barry McDonald.

The difference between enquiries for properties and those biting the bullet and actually buying, highlights that aforementioned Brexit 'dither'.

As a 'bad' Brexit becomes increasingly likely, some counties have been experiencing an influx of buyers while others are being adversely affected. To sum up, the late 'chaos' stage of Brexit appears to be giving a boost to the regional markets while at the same time continuing to cool the upper end in Dublin, the border counties, holiday locations beloved of English buyers and farm locations heavily dependent on exports to the UK.

While emmigrants who left in the 1980s or after the 2008 crash make up the majority of buyers, it is also telling that a full quarter (25pc) of enquiries from the UK are now from 'true' British buyers with no Irish connections at all, marking an historic change in migration patterns.

Prior to the survey, Brexit fallout has already been blamed for flattening demand and softening prices in the luxury home market in Dublin (a realm of business Brits based here and of Irish with big business dealings in the UK). It has already been blamed for squashing demand in the holiday home markets of West Cork and Donegal (the usual Engish- and Northern Ireland-based buyers have stayed away).

Of the UK-based parties contacting Irish estate agents in the last 12 months, almost one third (30pc) have openly cited Britain's EU departure as the reason for wanting to move to Ireland. This is an increase of 13pc on a previous survey carried out six months ago. And 14pc of subsequent sales resulting have directly come about because of the buyer's job being moved to Ireland.

The average uplift in enquiries in areas where demand has increased is 23pc, while those locations reporting a Brexit decrease are seeing British enquiries down by 20pc. There has also been a marked change in where British-based buyers of Irish property are coming from. Not surprisingly, given that British industries like finance are likely to be among those most adversely affected, demand from London and the South East of England has shot up by 40pc on six months ago.

This trend is also likely linked to recent price slippages in the London market (4pc in the last year). Many fear this could mark the beginning of a more pronounced tumble in values in the British capital as the realities of Britain's departure kicks in for banking and financial services sectors in particular.

It also means the timing couldn't be better for Irish estate agents looking to proactively engage the departure lounge. Around 7,000 UK-based buyers are expected to view Irish properties at the UK Property Investor Show being organised by the REA network on April 12-13 at ExCel London. "After April's event we will have a much better picture of what's going on," says Mr McDonald.

The REA Brexit survey also tells us quite a bit about the type of people looking to buy. Almost a quarter (23pc) are buying for eventual or immediate retirement, while 8pc are investors, 8pc are looking for a change in lifestyle, and 9pc are purchasing holiday homes despite slippage in that segment.

The most typical UK-based buyer wants a rural property (54pc), with 66pc looking for a one-off home rather than an estate property. And UK-based purchasers are spending more than an average buyer with the over-€500k category accounting for the largest tranche (22pc).

Brexit is also driving an upswing in commercial property investment on the vital M1 north-south corridor, according to REA agents in Co Louth, with REA Dundalk reporting a doubling of UK and Northern Ireland enquiries in the past 12 months. Around the country the effects are still very mixed. For example, while REA in Roscrea reports a doubling of sales from the UK this year, in contrast, REA Clonmel has reported a notable increase in sales by rural-based vendors who are getting out of Ireland and heading back to the UK.

If we also look to Central Statistics Office (CSO) data we can see that since 2016 considerably more British residents are now coming to Ireland in search of a property, a life and a job; instead of an Irish tide going the other way.

While 300 or so more people came here than went there in 2015, it is symbolic that the big reverse occurred in 2016, the year of the Brexit vote, when the net difference shifted up to 3,800 incoming.

In 2012, 8,000 more people moved to the UK from Ireland than those who made the reverse move. But in 2017 (the latest figures available) a massive sea change saw 6,600 net incoming to Ireland from the UK.

In truth the latest REA and CSO data really only shows us the latter effects of Brexit bedlam - the uncertainty phase. Where 'Brexit reality' will leave the Irish property market is still a great big unknown. For a clear answer to that million dollar question, you'll need to tune in again, likely at the end of this year.

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