Fri, Sep 19, 2008
While the construction industry might have been preparing itself for a 12- to 18-month slowdown, it was not ready for a global credit crisis and a recession, writes Barry O'Halloran.
BUILDERS MORE than most people, except possibly the banks, will not have taken much comfort from the events of the last week. (3)The crisis in world financial markets means that getting credit is not getting any easier. This is a particular problem for builders, because both commercial property investors and house buyers borrow most of the cost of the properties they buy.
Friends First economist Jim Power says that after this week's implosion in world credit markets, it's hard to see it coming back on stream for several years.
"Consumer confidence is shot for lots of reasons," he says. (1)"House prices will fall further and no one in their right mind is going to buy a house in the current environment".
Power adds that (2) there are more houses for sale than the number of people who want to buy them, a problem that will have to be ironed out before the industry can turn around. In short, there seems to be little light at the end of the tunnel that the industry entered with surprising speed after hitting its all-time peak two years ago.
While the industry might have been prepared for a 12-to 18-month slowdown, it was not ready for a global credit crisis and a recession. All this means that the construction industry is looking with even more urgency than usual to next month's Budget to take at least some of the strain off its shoulders.
There are three key elements to what it wants. The first is some means of kick-starting the housing market, largely by getting first-time buyers back into it. The second is a Government commitment that it will continue to spend money on the big projects that it has pledged to deliver in the €180 billion National Development Plan (NDP).
The third is restoring some of the... [continues]
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