Property players take a bullish outlook for 2008
Wednesday January 09 2008
TWO of the major property players have issued bullish outlooks on 2008's residential market, contrasting starkly with the prevailing mood of doom and gloom and a more tepid bulletin from AIB.
The most upbeat report of the day came from National Irish Bank, as their chief economist predicted a massive 60,000 housing units could be built in 2007, some 10,000 higher than consensus estimates.
Estate agents CB Richard Ellis carried on the feelgood factor, telling buyers that now was the time to pounce before "inducements" currently in the housing market disappeared towards the end of 2008 as the market rebounded.
Meanwhile, AIB struck a decidedly cooler note in its monthly housing bulletin, and their economist is now predicting house prices will record drops of as much as 6pc in the first few months of 2008.
Employment
Explaining his forecast of 60,000 completions, NIB economist Ronnie O'Toole stressed that there were "very little signs yet of the kind of fall in employment one might expect if construction were falling that rapidly (to 40,000 or 45,000 units)."
His reports added that construction may not reach a low point of 50,000 units until 2009, because of the time lags involved, before rising again.
"The stamp-duty reform, increases in mortgage-interest relief and continued immigration will combine to bring buyers back into the market," the NIB outlook continues. "Applications for planning permissions remain strong, indicating a long-term confidence in the market."
CBRE's outlook is less bullish on completions, with chief economist Marie Hunt predicting a figure of about 50,000 for 2008. "You have to remember that there's a lot of unsold stock hanging over from last year," she added.
Last year should see about 15pc wiped-off property values across the board, according to CBRE's research. "You won't see anything like that in 2008, there will probably be zero percent growth," Ms Hunt said.
"We haven't seen all of the falls, some of the premium second-hand stock could still fall about 5pc, but overall the expectation is for things to pick up in the second half of the year.
"The current inducements on new homes are probably as good as it gets, you might not be able to get as good value in the second half of the year."
Meanwhile, AIB are also predicting completions of 50,000 units for 2008, followed by 45,000 in 2009. The bank's bulletin, however, also notes that there is a "not insignificant risk that sentiment towards the housing market will remain depressed" and chief economist John Beggs is predicting further house-price falls.
"The most recent index showed a 6pc fall in prices from their peak, I'd say there is another 6pc to go and homes will be about 12pc off their peak in the coming months," said chief economist John Beggs.
His predictions assume the European Central Bank leaves interest rates unchanged tomorrow, and for the rest of the year, as do Ms Hunt's.
"Obviously the outcomes are worse if interest rates rise, but that's unlikely to happen," he added, while acknowledging there are "eleven-and-a-half months left to go in the year".
- Laura Noonan and Brendan Keenan
