Digital Deep Dive: House Prices and the Brexit Effect

Alexander Längauer

_{Digital Strategy Manager at RE/MAX Europe}

Digital Deep Dive: How has Brexit effected UK and Irish house prices?

In this month's digital deep dive we wanted to have a closer look at what happened to both the British and European housing markets since the announcement of Brexit back in 2016. But first, here’s a little bit of a refresher on what happened:

In 2016 the British Government held an ‘in or out’ referendum to leave or stay within the European Union. Almost 52% voted to leave the EU and in March 2017 a date was set to exit the EU in March 2019. After an extension to the deadline was granted, the UK finally left the EU on the 31st of January 2020 with a transition period until the end of 2020 to negotiate the future relationship between UK and EU.

Meanwhile, this political rollercoaster ride was having an impact on the real estate market around the UK and Northern Ireland. With all the uncertainty caused by Brexit, house prices have been falling in England and Northern Ireland for some time, while house prices have fluctuated erratically in Scotland and Wales. House prices have only started to stabalise slowly during the middle of last year.

Only after the final announcement the UK and Northern Ireland had officially left the EU, did buyers and sellers slowly get back to business and the market start to recover. Demand and prices started increasing again and it is expected that the market will keep recovering. People are likely to become cautious again towards the end of this year when the negotiation deadline approaches.

The Republic of Ireland's house prices have also slowed down massively during 2019, but there are signs that 2020 will be a good year for the Irish economy as well as the real estate market.

It is reported that Irish GDP is expected to grow by more than 3% and it is expected that the government will focus on investing in infrastructure. Experts also predict a “bounce benefit” after Brexit which would lead to growing consumer spendings and increased investments.

From an investors perspective Brexit, populism and the ongoing global trade wars are seen as major issues for global political instability.

Investors have concerns about the UK economy and think that this will also impact the property industry. Since 2016, a lot of businesses have relocated from the UK in favour of areas such as Amsterdam, Dublin, Frankfurt, Luxembourg and Paris.

It is widely accepted that investors perceive Brexit as bad for both the real estate markets of the EU and the UK, but are especially hesitant to invest in the UK at the moment.

For more information, read the study from PWC about the European real estate market from an investors perspective. It is an annual study with input from investment experts. The most recent study has just been published.

What has RE/MAX Europe seen during this time? If we look at our website stats from the UK and Ireland we can see that the foreign traffic portion of the regional website decreased from 38% in 2018 to 36% in 2019. Ireland made a jump from 44% in 2018 to 59% in 2019. That is even higher than in 2017 when foreign traffic was about 53%.