| 16.3°C Dublin

Housing crisis 'will be made worse by Brexit', experts to warn TDs

Close

Tanaiste Simon Coveney with EU negotiator Michel Barnier. Photo: AP

Tanaiste Simon Coveney with EU negotiator Michel Barnier. Photo: AP

Tanaiste Simon Coveney with EU negotiator Michel Barnier. Photo: AP

Brexit will play havoc with the already calamitous housing sector, experts will warn today.

Two different bodies are set to outline how rent increases are likely to be exacerbated after the UK leaves the European Union.

However, the cost of buying a home may drop, as an adverse impact on domestic economic activity lowers workers' ability to save for a deposit.

The Economic and Social Research Institute (ESRI) believes the country should be braced for:

• Rent Pressure Zones to be reviewed.

• More families needing State help to afford rent.

• Private sector construction to drop, meaning the Government will need to invest more in social housing.

• A slowdown in the decline in mortgage arrears.

However, hikes in mortgage interest rates could be limited.

Fluctuations

Separately, the Nevin Economic Research Institute will tell TDs and senators that housing demand will experience "greater fluctuations" as a result of Brexit.

There will be "significant regional differences in the impact of Brexit on the Irish housing market", with "particular pressure on the rental sector in the Greater Dublin Area".

Rents in the capital are already 36pc higher than at the peak of the Celtic Tiger boom.

Both bodies will give briefings to the Oireachtas housing committee today.

In his opening statement, Kieran McQuinn, research professor and head of economics at the ESRI, will describe the threat to the Government's existing policy on housing.

He will point to the Housing Assistance Payment (HAP), which will soon be the Government's main income-related social housing support for private renters.

"If income and employment growth are slower than anticipated due to Brexit, the numbers of families that qualify for HAP over the coming years will likely be higher than currently expected," Mr McQuinn will say.

Rent Pressure Zones, which limit hikes to 4pc per annum in some urban areas, "may require more frequent revision".

A key target of the Government's Rebuilding Ireland project is to have more than 20,000 houses built every year.

However, Mr McQuinn will caution that "greater uncertainty" due to Brexit "is likely to result in lower housing demand and supply".

There will also be major implications for home financing.

It comes as the Brexit talks go down to the wire, with the EU insisting the UK agrees to a "level playing field" if it is permitted to enter a UK-wide customs arrangement.

In particular, EU negotiator Michel Barnier's team is understood to have warned the UK must abide by EU environmental and labour laws for the duration of the agreement.

This is likely to create further difficulties for British Prime Minister Theresa May on the home front, as many MPs will argue this amounts to being "trapped" by EU rules when they want to negotiate new trade deals.

It would also restrict the ability of the UK government to provide state aid for certain sectors of the economy.

Weariness

However, sources said "anything less" will be perceived as giving "an unfair advantage" to the UK in a post-Brexit era.

"There is weariness about the UK-wide backstop in other EU capitals. At this stage the odds are the EU27 will go for it but they will want to study the small print very carefully," they added.

All sides now accept this week is the deadline for a sign-off on a withdrawal agreement in London if a special meeting of EU leaders is to be called for the last week of November.

Mr Barnier briefed EU foreign minsters yesterday on progress, saying that "as in any negotiation, the final stretch is always the most difficult".

He met privately with Tanaiste Simon Coveney afterwards to provide a more detailed update on the negotiators relating to the Border.

Mr Coveney said support "is stronger now than ever" for ensuring no hard border.


Privacy