Industry insiders expect property boom to continue

Developers and investors in residential and commercial property markets expect the current building boom to continue, at least in the short term, according to a survey conducted at the Ulster Bank CBRE Gunne Property Conference 2005 this week.

Practically all of the delegates at the conference thought that the current boom would continue, with 90% feeling that it would last more than another year.

In addition, almost two thirds (63%) felt it would last more than three years.

There were some signs of slower activity in the 1st quarter of 2005, with 60% citing factors which limited activity - principally lack of demand and labour shortages.

More than half felt that the number of new house completions would be down on last year, but not to any great extent.

Hardly any of the delegates expected house prices to fall, with 40% forecasting rises in the 3-4% range next year, and as many again seeing inflation averaging above 5%.

Up to 70% felt that the average house price in Dublin would rise to €750,000 or even more by 2015.

This conflicted with the experts’ opinions, which would be closer to an average price of €500,000.

There was caution regarding rents, with more than half of attendees believing that they would be unchanged in two years time.

However, Professor Joe Durkan of UCD felt that rents might fall again as house price inflation eased and investors decided to offload empty properties.

While 53% felt that the business outlook for the next three months was better or much better, a sizeable minority, 42%, expected no change.

There was a strong consensus that land prices within the Greater Dublin Area will continue to rise over the coming years, with four fifths expecting an increase.

Planning delays are still cited as the highest negative facing the industry, with cost inflation and declining demand sharing second place.

Developers also felt that there were inadequate supplies of zoned land, even though Marie Hunt of CBRE Gunne quoted official figures to the contrary which indicated a plentiful supply.

Not surprisingly, demand is being driven by the residential sector and a buoyant economy, with commercial activity and civil engineering relatively quiet.

On the plus side, there is scope for the latter sectors to absorb the slack if housing slows.

Delegates were relatively evenly split, over a wide range of areas, on which SSIA money would be spent.

The poll revealed that investment in property was the favourite, with 60% of the vote, though this was spread over property in Ireland and abroad, as well as home improvements and reductions in mortgages on existing properties.

Other areas in which delegates will spend their SSIA money include the purchase of equities and pensions.