Thursday, November 23, 2006

A sense of the times or the Times?

Minister for Finance Brian Cowen said in remarks to reporters today, that he believed the series of interest rate hikes by the European Central Bank were beginning to put the brakes on Irish house prices.

"My information is that there has been a softening of prices in recent months and that's to be welcomed," he said, adding he believed Ireland's property market was "heading for a soft landing".

"Obviously, the interest rate hikes are starting to kick in," he said.

The Minister said that housing output this year would probably hit 85,000 units, with "a similar sort of output" next year.

He said there were very strong fundamentals underpinning the market and that in real terms, interest rates were still historically quite low.

An example of the current slowdown in the housing market is the size of today's Irish Times weekly property supplement - down from an average 60 pages to 18 pages and only 3 full pages of advertising.

Following political debate on abolition and reform of stamp duty on property in recent times, buyers are holding off on purchases ahead of the Budget on December 6th.

However, the fall in advertising income of about €500,00, in the space of a week, is an illustration of the wide economic ripple effect that a property slowdown will have across a wide swathe of business.

Irish Property Boom - It's easy to underestimate how much economic prosperity depends on it