Excerpt from recent CIF Circular…..
“The Government is currently in negotiations to secure a new EU stimulus package. If this scheme is agreed it should have a major impact on the construction industry. The CIF estimates there are hundreds of shovel ready projects around the country which could be given an immediate green light if the Government secures an agreement.
These would be highly labour intensive projects that tie in with Government policy and would provide significant number of jobs for the construction sector, which has seen the employment levels plummet in recent years. The other benefit is that many of these projects already have planning permission in place, so they will not need to go through that lengthy process. If the Government manages to secure the stimulus package these projects could be rolled out within a matter of weeks or over the next few months.
There are rail, road, housing, school, broadband and water projects throughout the country that could be advanced quickly if this package is agreed. Examples include the Metro North project, the new Grangegorman Campus for DIT, the Thornton Hall prison, the Backweston Forensic Laboratory, the M20 Cork to Limerick motorway and many other road, water and school projects.
If this package does come on board we believe it could be a “game changer” for the Irish construction industry and for the whole Irish economy. It could provide exactly the kind of work, investment and stimulus that will be needed to get the economy off its knees.
Central Bank analysis suggests house price overcorrection
The Central Bank has recently published a research which suggests Irish house prices have overcorrected by as much as 12 – 26%. The CIF has supported this research as it tallies with the sentiment that is being expressed by Federation members and what they are experiencing on the ground.
The fact is that sales prices of new homes today are less than actual construction costs. For the last three years, little speculative housing has been built. Housing construction activity levels have been dominated by one off houses built to order. At the same time there is a pent up demand for new units in the greater metropolitan areas.
The Federation’s projection is that the Irish housing market will require about 25,000 new homes on an annual basis. Yet construction activity for 2011 saw a little over 10,000 new homes produced and it may fall to as low as 8,000 units in 2012. Most of these being one off units, built to order.
The availability of mortgage credit is one of the major stumbling blocks inhibiting transactions in the housing market. That and purchaser confidence will be key factors in influencing purchaser activity in the months ahead.”
