Ireland can expect prosperity when Britain is in difficulty

Ireland has a happy historical knack of doing well whenever its big neighbour is struggling,

IF you stay up to date with employment stories you will have noticed for quite some time that there are many firms locating in Ireland due to Brexit.

The jobs that come with these moves are typically medium- to high-skilled, and with above average remuneration. Many firms are concerned about the availability of the skills and housing they need in Ireland and so they are bringing in staff with them while seeking property at the same time.

On a small scale, this is evidenced by the likes of JP Morgan buying Capital Dock and 200 residential units with the large commercial office holding. Many of these homes will be to accommodate new staff.

This all feeds into something that I consider unusual in the general Brexit commentary.

It is of the downside risks to Ireland due to things that happen in Britain. Obviously, our largest trading partner matters, but to what extent does it then play into things like the property market?

Agriculture is relatively protected; we are master exporters when it comes to dairy products and meat. Technology jobs are already here and growing, as the likes of Facebook take even bigger positions on Ireland — as it did recently, when it announced it would be relocating to the Bank Centre.

There are going to be some areas that could suffer, but in a global world there are parts of the economy that are always open to risk, and various exposures like the vagaries of prices in raw materials, foreign exchange and geopolitical changes.

The one thing that isn’t getting much of a mention is house prices; they are mentioned all the time independently of Brexit, but not often in relation to it.

What I hope to do is show you that Ireland has a long history of strong house prices when Britain suffers.

History has shown this time after time — it isn’t something that makes me happy or that warrants any celebration, rather it’s simply a by-product of how we can naturally leverage the hardships of others.

To do this I am reliant on looking at the history of house prices in Dublin going back to the year 1708,when records first began.

Several years ago I was part of a team that put together a house-price index going back through the last 300 years.

What we saw was that Ireland has had many housing booms and busts. None were so spectacular as the last one in terms of height and fall, but certainly the last housing crash wasn’t our ‘biggest’ in terms of duration. The longest house-price crash lasted most of the 1800s.

The first half of the 1700s was a bit of a write-off. Britain was doing OK, but in Ireland we had many harvest failures; there were small famine-like events, and then a true famine in 1740, which killed 300,000480,000 people.

The population of Dublin was still increasing — doubling by 1750 from the start of the century — and that gave a housing boom. It’s worth noting that in the 1750s we also had banking failures, and government quickly blamed banks for reckless credit.

One of our largest booms came during the Napoleonic Wars. Exports rose by 40pc and house prices shot up too. Britain was in trouble, and Dublin blossomed. It’s worth noting that Ireland was on both sides of the table despite being part of the British empire — Napoleon’s horse Marengo was rumoured to have been bought at Ballinasloe, and the French army had an Irish Legion.

The end of these wars and the Act of Union led to a decline in house prices. Things were difficult as more of the 24 instances of potato crop failure (we had many outside of the famines) kicked in.

The secular decline reached a low during the Great Famine, but the postfamine years were good for Dublin house prices. During that time, Britain had the Crimean War and was involved in wars in Persia, China, Nicaragua and India.

One of the interesting things about solving the property crash that came after the Famine was the Nama-like entity called the ‘landed estates’.

Much like Nama, there was widespread belief that foreign buyers were snapping up the nation and all manner of wrong-doing occurring. Some of those rumours were true, much of the narrative was false.

The latter parts of the 1800s were marked by the ‘long depression’ in the UK and USA, but you wouldn’t spot it if you looked at Dublin house prices. They stayed on a strong upward trajectory.

Other significant houseprice booms occurred during World War I and II. Our ability to help feed the British Army was one which always led to prosperity, while people died in their droves across Europe (many who hailed from here).

This all comes back to the idea that Ireland can see prosperity when Britain is in difficulty.

Dublin house prices rose during wars, they even did so (for the most part) during the Great Depression.

It cannot be assumed that when looking at house prices and jobs in Dublin that Brexit will do anything other than bring more prosperity to the capital; whatever pain comes will likely be felt most outside of our cities.

This time, prosperity won’t come from feeding the British Army — we’ll be feeding the global business world with financial services and technology. This is also why neither rents nor capital values of property are going to stabilise for some time.

Whatever about our existing internal demand, there are many highly paid workers arriving who don’t have the choice of living with relatives if they want to or not because they don’t have any relatives here.

The Brexit Boom of Dublin property is going to play out for several years yet.

‘One of our largest booms came during the Napoleonic Wars’