Thursday 14 December 2017

Booming economic growth threatened by housing market fears

The surge in property prices is a concern for the citizens who live in and around the capital. Photo: PA
The surge in property prices is a concern for the citizens who live in and around the capital. Photo: PA
Charlie Weston

Charlie Weston

The Dublin economy is experiencing mixed fortunes, with strong employment growth but high rents and a dip in consumer confidence.

Unemployment in the Dublin region fell in the three months up to September.

There was strong economic growth, according to the Dublin Economic Monitor which is put together for the four Dublin local authorities by DKM Economic Consultants and KBC Bank.

But the region is being hit by a dip in consumer confidence, and rising rents and surging residential property prices.

Consumers appear to be downbeat about their fortunes as they fear the negative impact of the Brexit vote and changes in US policy following the election of Donald Trump.

But cost-of-living pressures may be having an even stronger influence on consumer confidence, according to KBC Bank economist Austin Hughes.

Rents are at all-time highs in the capital, with public transport and motor insurance costs also rising in the past few months.

"Dublin consumer sentiment declined significantly in late 2016 as the mood of consumers in the capital weakened notably more than that of consumers in the rest of Ireland," Mr Hughes said.

Consumers are nervous about Brexit and changes in the US.

"However, a more influential factor was a downgrade of consumers' own personal finances that may reflect pressure on living costs in Dublin," he said.

Jobs are being created in the capital, with the construction and industry sectors showing the largest expansion.

Unemployment in Dublin has fallen to 7.8pc.

The private services sector also had jobs growth, with almost 4,000 added compared with the previous year.

The public sector showed stable employment during the quarter, according to the report.

But the surge in property prices is a concern for the citizens who live in and around the capital.

Residential property prices in the region have now returned to 2009 levels, according to the report.

Rents for houses in the capital fell during the three-month period, but the cost of renting an apartment jumped during the quarter.

DKM Economic Consultants' Lorcan Blake said the latest indicators for the Dublin economy point to a strong performance with growth underpinned by an ongoing improvement in the labour market and robust business activity levels.

"However, the downward trend in consumer sentiment and stubbornly high residential and commercial rents are of concern," he said.

Dublin Chamber of Commerce said a steady supply of increased housing is vital if the strong growth in the Dublin economy is to be maintained.

Irish Independent

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business