Irish home prices will surge at the fastest pace in Europe in coming years, fueled in part by bankers moving to Dublin as the UK prepares to depart the European Union, S&P Global Ratings said.
The price of a house in Ireland will increase 8.5 percent this year and 7 percent in 2018, S&P said. That’s the fastest rate out of 10 European markets examined by the ratings company.
Ireland is one of the preferred destinations for financial firms planning to move staff from London to another EU location in order to retain so-called passporting rights which allow them to trade with the bloc.
Bank of America Inc. chose Dublin as its preferred European Union hub after Brexit last month, while JPMorgan Chase & Co. bought a planned city center office block that could hold as many as 1,000 people.
“The resulting inflow of workers in need of housing should contribute to sustaining house-price increases in Dublin,” S&P economists including Sophie Tahiri said. “Other regions, which have so far been lagging behind, will in turn benefit from a catch-up effect, as the economic recovery increasingly broadens there as well.”
As well as the impact of Brexit, a home shortage in the country shows little sign of ending.
As many as 40,000 new homes need to be built each year to keep up with demand, compared with the 15,000 homes completed in 2016, S&P said.
UK prices are forecast to fall 1 percent in 2018, the ratings company said. Potential buyers are holding off for now until there is more clarity, S&P said.
That “wait-and- see” trend will “likely continue until uncertainty abates,” according to the ratings company.