Sunday 15 December 2019

Interest gives boost to property market

The amount of interest generated by NAMA's publication of properties for sale underlines the phenomenal interest in the sector, even in the current economic climate.

The announcement of the €1.1bn loss recorded by NAMA in 2010, coming on top of Wednesday's CSO announcement that the rate at which house prices are falling had accelerated in June, demonstrated yet again how uncertain a market can be.

NAMA took the opportunity of the publication of its 2010 annual report to unveil a scheme under which buyers would be effectively loaned 20pc of the purchase price of homes which they bought from the agency for up to five years.

While NAMA is perfectly within its rights to use whatever means it deems necessary to shift some of the huge backlog of unsold homes on its books, there are those who will question the wisdom of a government body encouraging people to buy homes when property prices are still in decline.

But it has to do something to kickstart the market and start getting in cash for taxpayers.

Coincidentally the NAMA annual report was published just a day after Education Minister Ruairi Quinn revealed that his plans to replace discredited state training agency FAS with a new organisation, Solas.

In addition to its other well-publicised problems, FAS/Solas has also seen its raison d'etre seriously undermined by the property crash, which has decimated demand for the 18,000 apprentices, mainly in construction trades, who were qualifying every year in the boom.

The planned replacement of FAS by Solas prompted the intervention in the debate of Construction Industry Federation boss Tom Parlon. With Mr Quinn having criticised FAS for having produced too many construction workers, Mr Parlon, speaking on RTE radio, complained that his organisation had not been consulted about the change.

He then broadened his attack on the Government and argued that while the peak levels of construction activity, up to 24pc of total economic output in 2007, were excessive and unlikely to return, there should be a plan to increase construction activity from its present 4pc-5pc of economic output to 12pc-15pc of total economic output. With the most recent census having recorded 294,000 empty homes, almost 15pc of the total, the new road network virtually complete and the country up to its gills in vacant office blocks and half-empty shopping centres, construction activity is going to remain depressed for the foreseeable future.

Even when construction activity does begin to recover, something unlikely to happen much before the end of this decade, it will climb to no more than the 11pc-12pc of economic output which is the norm in the UK and mainland Europe. In future the construction industry must be made to serve the needs of the broader economy and not, as was previously the case, the other way round.

Irish Independent

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