A balancing act between good and bad news has been taking place this week on the property front. A report from the Construction Industry Federation (CIF) is showing that 9,000 jobs in the sector have been lost in 2009 and a further 3,600 related jobs are affected. This, according to the report, will put immense pressure on the exchequer in the form of a €162m annual social welfare payout. Competing with this grim reading is the news that the rent yield in the private rental market has increased for the first time in over two years.

While tenants will not welcome this, it will be welcomed by investors, landlords and their creditors. It s important to remember also, that it is a marginal increase of one per cent. Despite being a small figure, it does give some signs for the year to come. It may act to reinforce the position that many commentators have argued, that the property market has turned a corner. This maybe the case, but there is a long way to go. According to yet another economist speaking on the current figures, Michael Taft, Economic Researcher with UNITE, the current picture painted by the optimists is incongruous, saying: “Stock over-hang, negative equity, plummeting investment - you couldn't write a worse script.”

Taft mentions stock over-hang, an element that brings with it a mixed blessing. The relative inaction on the sales market led to the movement of a great deal of properties into the rental market. The oversupply meant that consumers had much more choice forcing landlords to slash rents in an effort to entice tenants in and, ultimately, keep their properties occupied. This shift from sale to rental unbalanced the market and now, with a great deal of the over-hang having been reduced, rental yields are slowly but surely increasing. The latest report on the property from Daft.ie indicates that up to 20 per cent of the existing housing stock on the rental market is now occupied. Portents of an upturn indeed. It is important to recognise, as Taft does, that there is a world of difference between what the International Monetary Fund (IMF) call statistical recession and human recession. Reflecting the property market, the business world is looking to 2010 as the one to take it out of recession. As expected by many commentators in the business and economics world, Ireland is due to return to growth by the middle of 2010. This means that later this year, Ireland should, technically at least, be out of recession.

This statistical reality, however, is at a remove from the people that will be affected by it. While exports will lead the return to growth in the business world, the key areas of unemployment and pay scales always lag behind, meaning that even a return to growth in 2010 and an end to the recession won't mean a great deal for those in the dole queues or with drastically reduced salaries.

Comments (0) »

Show/Hide comment form

Name

Email

Title

Comment

Write the displayed characters

Add Comment