The Construction Industry Federation (CIF) has dismissed Monday night’s RTE Future Shock: Property Crash television programme on the risks of a housing market crash as being sensationalist and inaccurate in places.
According to Hubert Fitzpatrick, CIF Housing Director, ‘the continued strength of the Irish economy is such that the programme’s pessimism is completely misplaced. The Irish economy is currently growing by 5% in real terms, which is by far the highest rate of growth within the European Union. Even the most pessimistic prediction of economic growth next year, which is 3.5%, will see the Irish economy growing at nearly twice the EU average. The economy is creating over 1,000 new jobs each week and all indications are of continued growth in this area, while the population has been growing by over 100,000 people per year”.
“The proportion of non Irish national employees in the construction industry is about 12%, which is in line with the average across the economy as a whole and very much lower than in particular sectors of the economy. These young, highly motivated and skilled workers have had a hugely positive impact on the ability of the Irish economy to continue to grow and of the construction industry’s ability to meet this demand. Rather than unemployment in the construction sector, however, the Irish industry could find itself competing with the South East of England for these workers over coming years.”
“Construction must be considered in its entirety. The Government recently announced the State’s largest and most ambitious programme of public infrastructure development in the new National Development Plan. At the time, some commentators raised concerns about the capacity of the industry to deliver the Plan. Any movement of labour away from housing will be quickly absorbed within the general contracting sector, which is responsible for building the country’s schools, hospitals and offices amongst others.”
“The current situation in the housing sector is a sign of strength and maturity, with the industry responding quickly to the transition in the market. The reality however is that demand for housing in Ireland remains extremely strong. Ireland’s population is now growing at nearly 5 times the pace of the Eurozone and the population in the key housebuyer age groups significantly faster as in the rest of Europe. Falling family sizes and the requirement to spread economic development more evenly throughout the country will also drive strong demand going forward for housing”.
Finfacts Comment: The evidence of the Irish economy's overdependence on the construction sector is well documented, while the export sector is faltering. A country like Ireland cannot simply prosper longterm without a thriving export sector.
In 2006, of the 86,000 jobs that were created in the Irish economy, only 6,000 were in the tradable goods and services sector.
About 17% of the private workforce is in the construction sector and in 2006, 17% of tax revenues came directly from property.
There is a substantial correction in the housing market already underway and it comprises two-thirds of construction output.
The overhang of empty houses, the big decline in the number of first time house buyers in the market and the flatlining second hand market will be more than a blip at a time when the US dollar is weak and the resurgent German economy is signalling an ECB rate of 4.25% by year-end compared with the current rate of 3.75%.
Irish House Market: Treading the spectrum between blind faith and calamity howling