The Construction Industry Federation (CIF) has called on the Fitch’s rating agency to look at how they compile their residential property briefings for Ireland in future. The Federation said that compiling a macro view of the Irish property market no longer holds water with Ireland now a series of localized markets.
“It’s not accurate to present a macro picture for Ireland’s property market at present,” said CIF Director General Tom Parlon. “What we’re dealing with is a series of mini marketplaces. That’s why last year prices in places like Dublin, Cork and Galway as well as other urban areas were stabilizing at a rate that was completely at odds with what was happening in more rural residential markets.
“The legacy from the Celtic Tiger days is that too much residential property was built in certain parts of the country. As you can see from the Government’s vacant housing report produced late last year, this was particularly pronounced in counties likes Cavan, Longford, Sligo, Roscommon and Leitrim. The vacancy levels in the National Housing Survey for these areas varied from 17 – 35 per 1,000 households.
“However we are starting to see a distinct shrinkage in the level of vacant housing in the more urban locations. Areas such as Waterford City, Limerick City, Galway City and Dublin City show vacant housing of only 2 – 7 per 1,000 households in these areas.
“With that level of fluctuation between supply along with the increased level of demand that is manifesting in urban areas, how does it make sense to produce an overall report for the residential market in Ireland? It is a flawed and irresponsible approach. It is damaging to some of the localized markets in Ireland at a critical time. What’s going to happen to the Dublin market this year will bear little relation to the market in places like Leitrim.
“We agree with the skepticism voiced by Minister Noonan on the report. He claimed that it was a “pretty ambiguous kind of assessment” and we believe that is fair comment. This country has learnt a lot since the Celtic Tiger years and one point is that the devil is in the detail.
“The Fitch report speaks to the kind of catch all commentary that used to permeate Irish property analysis. That’s not good enough these days. It’s an out of date approach. This country requires more focused, more detailed information to be provided. For that reason we would urge Fitchs to reexamine the way they go about providing Irish residential property commentary in future.”
“Proper analysis should also include the increase in mortgage lending that has been recorded during the last few months of 2012. It will also need to take into account the extra lending by Permanent TSB, which will increase the mortgage lending options available to potential purchasers. Obviously with prices having contracting significantly in recent years the increased affordability of housing should also be factored into consideration,” Mr. Parlon concluded.