Construction industry feels the pain of slowdown

THE loss of confidence induced by the credit crunch is beginning to manifest itself quite sharply in the housing statistics.

The latest figures from Homebuilder and Premier Guarantee make it clear both the consumers and the building sector have deserted the housing market in droves.

Figures for July show the number of houses registered fell a massive 80% on the same month last year.

These registrations are a barometer of how many houses will be built in a given year.

The statistics show that the slowdown in the housing sector is gathering pace, a spokesman for the Construction Industry Federation said, pointing out the 45,000 new homes projected for this yea was in danger of not being met.

The impact of the rising cost of credit, the ECB rate rise of 0.25% last month, the highest level in seven years, is also affecting house prices analysts said.

In the year to date, they are down roughly 8%, with experts blaming some of the decline on the tightening lending conditions imposed by the Irish banks who are struggling to meet their own funding needs.

The ECB’s decision to keep rates on hold yesterday, despite a slowdown in the eurozone economy, will do nothing to restore investor/consumer confidence in the economy.

IIB Bank has reported that sentiment among consumers has worsened. It said the tough credit environment and budget cutbacks have made consumers even more fearful than before.

But the IIB/ESRI survey said consumer sentiment has been in decline for the past three years.

It said the impact of higher borrowing costs, exacerbated by the credit crunch over the past 12 months and lower property values have all added to the sense of gloom spreading across the economy.