News Editorial

Tuesday 16 September 2014

Editorial: The growth in house prices must be orderly

Published 31/07/2014 | 02:30

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David Duffy, the chief executive of AIB, has predicted that it could take up to four years for supply to catch up with demand
David Duffy, the chief executive of AIB, has predicted that it could take up to four years for supply to catch up with demand

We were warned more than three years ago that when house prices re-bounded they would do so like a rubber ball – it was a prophetic warning which we all conveniently ignored, because at the time it seemed quite unbelievable. Not so now. The shortage of homes in the Dublin area has led to a surge in asking prices, with the cost of a houses in the capital and its environs rising by a staggering 25pc in the past year.

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Now David Duffy, the chief executive of AIB, has predicted that it could take up to four years for supply to catch up with demand, with the clear implication that the present buying frenzy in certain parts of Dublin could continue for that period.

The jury is still out on whether what is happening in the Dublin market – and in some other urban areas – is a bubble, or merely a correction after six successive years with little construction activity and a devastating drop in property prices all over the country.

We didn't get a soft landing when the market collapsed but it is incumbent for the authorities to ensure that when the market re-corrects it does so in a more orderly fashion than in 2008.

Another element which has now to be factored in is a pronouncement by Irish Water that key parts of the country, including Dublin, which have been earmarked for development, will have to wait until infrastructure that ensures a clean water supply and a safe sewage system is in place.

This underlines the need for strategic planning on a national basis for both infrastructure and housing. It also highlights the dangers of inadequate investment in vital public services – in this case water – and the damaging consequences that result.

State still has to tackle long-term unemployment

A further fall of 3,400 people signing on the Live Register for the month of July is a reduction of just 0.1pc. But small as it is, the real significance lies in the fact that it is the 25th consecutive drop in the number out of work. It is also heartening that the number of claimants under the age of 25 has decreased for the third year in a row.

However, with 382,000 people currently unemployed, there is no room for complacency because the number of people out of work is moving inexorably toward the European average.

Many of those still drawing the dole were originally employed in the construction sector, and as they are trained workers ready to take up their tools it is essential that the Government moves to get a proper, functioning housing market back on track.

The area of most concern for the authorities is that almost half of dole claimants have now been signing on for one year or more.

As many of these are young men, it is essential that the Department of Social Protection and the various State employment agencies make it a priority to ensure that proper training and skills course are available to ensure that those who are able to go back to work do so with minimum of fuss and the maximum of speed.

Unemployment, especially long-term unemployment, is a blight on modern society.

We have to praise the authorities, the Government and the various stage agencies involved, for what has already been done, but remind them that there is much more to do before we can feel any real satisfaction about the continuing drop in the number of those claiming unemployment benefit.

Irish Independent

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