By Mark Keenan.
House prices will rise by 4.2pc in the new year – but only if there is a soft Brexit, according to a nationwide survey of estate agents.
Price rises in the Dublin region are expected to be slightly lower at between 2.8pc and 4pc.
However, estate agents warn that if the UK crashes out of the EU without a deal, that will take Ireland “into the unknown”.
Depending on the severity of the hit to the Irish economy in 2019, property price growth could be lower, prices could be static for a time, or prices may even fall in many areas.
The prediction of a 4.2pc rise comes off the back of a 4.64pc rise nationally in the price of an average semi-D in 2018. In Dublin, the rise was lower at 1.97pc.
However, house prices grew by less than 1pc across the country in the final quarter of the year, with uncertainty over Brexit cited as one of the main reasons for the slowdown.
The Irish Independent/Real Estate Alliance (REA) house price forecast for 2019 says there are a number of challenges facing the market in 2019, including a possible hard Brexit and affordability thresholds being reached in parts of the country.
Agents in Dublin city are predicting price rises of 2.8pc in 2019, with increases of 4pc forecast for north Co Dublin (4.9pc last year). Meanwhile, in south Co Dublin there is an anticipated upturn of 3.5pc (0.9pc in 2018).
However, Brexit uncertainty is affecting different locations for different local reasons. These include:
:: Uncertainty in Border counties where locals stand to lose most from the loss of free movement and commerce;
:: In the upper end of the Dublin market where many high net worth individuals who buy property are relying on business exchanges with the UK. Conversely, this is also the end of the market which will benefit from an influx of banking immigrants;
:: In farming areas where there are fears that the local economy will take a big hit;
:: Holiday home locations where UK buyers, retirees and tourists are a big factor in the market. Conversely there is also evidence of UK nationals considering a move from traditional UK ex-pat locations in Spain and other European sunspots;
:: In areas which have previously experienced high emigration, Irish buyers returning from the UK make up a big part of the market and these will now sit tight to see whether their buying power will be affected.
REA spokesman Barry McDonald said: “Typically, it remains the case overall that lower value stock is selling better than larger family homes above €400,000.
“We expect a minimal increase in values as stock levels on the market continue to rise. In my own area of Lucan, new home developments are earmarked to hit the market in spring 2019, and this will only continue the trend of increased stock numbers.
“It is hard to predict what will happen with Brexit and property prices. Our agents either see people holding back in Border and holiday home areas because sterling might rise giving buyers more power, or more generally, because they do not know how the market will react to a no-deal scenario.”
Other Dublin agents predicting a Brexit slow start to 2019 include John Cumisky of REA Cumisky in Swords and Balbriggan. In south Dublin, agent Ed Dempsey said the Brexit effect was now starting to show at the upper end of the market, and next year’s prices would reflect the final Brexit outcome.
However, estate agencies in three of the four main cities outside Dublin are cautiously optimistic about 2019, with rises of 4pc predicted in Cork (2.4pc in 2018) and 5pc in Galway, which experienced 9.7pc growth last year.
In Limerick city, REA O’Connor Murphy is predicting an increase of 4pc with a stronger new homes market while sales in the second-hand market will take longer to achieve.
Agents in Waterford are predicting the highest increases for 2019, estimating a rise of 10pc after a year which saw average houses sell for €210,000 – an increase of €15,000 or 7.7pc in the past 12 months. Waterford was slower than many other locations to recover from big value drops experienced during the crash.
“Demand continues to be strong and asking prices are being exceeded by competitive bidding in Waterford city,” said Des O’Shea of REA O’Shea O’Toole. “We expect the 2019 market to be buoyant. Factors include easier access to mortgage finance, good demand, and scarcity of given property types.”
Apart from Waterford city, the biggest rise being predicted nationwide is in Longford, where affordable housing at an average price of €105,000 drove inflation of 16.7pc in 2018.
Counties around Dublin are forecasting a rise of 4.6pc on average after a year which saw their prices increase by 4.1pc, slightly below the national figure.
In Drogheda, now a busy commuter town also with links to the Border, prices in 2019 are predicted to rise at a restrained level. “We would anticipate a modest increase, possibly up to 3pc during 2019,” said local agent Darina Collins of REA O’Brien Collins.
“The political uncertainty around Brexit, the Central Bank lending restrictions and the fact that mortgage exemptions are front-loaded to the beginning of the year are all pointing to a fairly flat market.”
The Brexit effect is not only being felt in major towns and cities, with middle Ireland anticipating no deal will have an affect on property prices.
“A hard Brexit could have a serious knock-on affect to some large employers in the area and to the residential letting market,” said Robbie Grace of REA Grace in Callan, Co Kilkenny, where a 2pc rise is predicted for 2019.
But it is in farming territory that most uncertainty reigns over prices.
Nenagh-based agent Eoin Dillon has described how a deal or no-deal scenario would affect business in Tipperary in plain terms.
“If Brexit goes well then a +5pc to +10pc increase will be on the cards. If it’s no deal, or a bad deal, then we foresee only a nominal increase,” he predicted.
In wealthier tourist towns, Brexit is also proving to be a wild card. The higher end of the market – properties over €500,000 – has already been affected by Brexit, claim agents REA Coyne and Culloty in Killarney.
“If there is no hard Brexit, sterling could rise, and potential buyers are therefore holding off as there could be up to 15pc extra to spend in this case,” said Donal Culloty.
In the meantime, other traditional holiday home destinations such as Bantry are finding a new breed of Brexit buyer relocating from mainland Europe.
“This year three UK couples relocated from Spain, Portugal and France due to Brexit – all purchasing properties under €200,000,” said John O’Neill of REA Celtic Properties.