Advisors.ie

Historically, Dublin has benefited from adverse events in Britain. Brexit may be no different, as house prices look set to rise even further if jobs are relocated here

Hardly a week goes by that we don’t decry the feasting of ‘vultures’ on Irish assets and how they have benefited from our misery.

Yet, when we are the beneficiary (or the vulture), we are far more circumspect. We argue, not over the moral right or wrong of being the beneficiary of misery, but rather how the spoils ought to be split.

There is plenty of evidence for this. As the rest of the western world rages about the ‘double Irish’ and our corporate tax regime, even the most cursory overview would force you to accept we have it rigged in a way that encourages outcomes such as companies locating here to avoid their own domestic taxation.

Where is the moral outrage there? Meanwhile, indigenous commentators are more concerned with what we might do with the money or what we could do if we got more of it, rather than focusing on the actual issue at hand: whether other countries are hard done by when profits and turnover are remitted here.

This is an important point as we consider the property market in light of Brexit. In my humble opinion, the idea of ‘Brexit being good for business’ has more than just a speculative foundation, at least when it comes to our property market. I like to think of it as the ‘Brexit boost’.

One of the most unfortunate exercises I have ever undertaken was to attempt, along with Frank Quinn of the Blackrock Further Education Institute, to create a price index for property in Dublin going back about 300 years to 1708.

What was meant to take three months took more than three years. We failed to monetise it, and all the team of people working on it came away with was a graph on a page and some interesting historical stories.

Brexit is ‘unlike’ any of the previous issues Britain has faced. Yet it has been proven resilient and capable and will no doubt be just fine in after leaving the sacred EU. What will prove interesting is how it affects our property market.

Did Irish house prices ever rocket in the past when Britain had problems? Yes they did, although by ‘Irish’ I can only speak with qualification about Dublin, in particular, because our study didn’t cover the entire nation.

Briefly, before the housing bubble burst, Ireland had several periods where our housing market had strong, positive growth.

One example was during the late Victorian period. This was a time when Britain was embroiled in wars all around the world, from the Mysore and Maratha wars to the US War of Independence. There were wars in the late 1700s with France, Spain and the Netherlands. And into the 1800s there were the Napoleonic wars.

What happened to Irish property prices during this time? They soared. At the time, Dublin was the second city of the empire and our exports of agricultural goods and other merchant goods ensured we had a robust economy.

After that, many factors then saw a decline which culminated in the mass death and emigration of the famine period. It’s worth noting that the 1800s were the only time that Irish property prices saw relative stability. That said, the means of achieving it are not worth repeating.

The other ‘boom’ times were during the First and Second World Wars. Again, Britain was embroiled in geopolitical problems and our property market shot up. To me, it doesn’t seem coincidental that this might happen. The value of trade and additional activity meant our resources were in demand.

Which brings us to why Brexit may weigh in on our property market.

We have already seen companies looking to locate here as a foothold in the EU. Britain will endeavour to, no doubt, successfully retain the companies it fought hard to attract to its shores in the first place. However, many will also be forced elsewhere due to regulatory requirements.

As the only English-speaking nation left in the European Union, that puts us in a position to see more jobs move here. Those jobs will be skilled and will bring with them a need for housing.

These new arrivals will probably see less of a cost constraint than many locals because of the pay level differentials and a lack of alternative choices they will have.

Commercial rents are a forward indicator of this to an extent. Office staff require homes to live in. While Brexit may bide negatively for many aspects of this nation’s economy, the property market, and Dublin’s in particular, will probably see an uplift because of it.

Does that mean that when we benefit from the misery of others that we are the vultures? It seems our capacity to examine the extent of our moral duality will be tested.

Karl Deeter is compliance manager at mortgagebrokers.ie. Follow him on Twitter: @karldeeter

this article first appeared in the Sunday Business Post on the 9th of April 2017