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House Prices To Fall Until 2012...

House prices to fall until 2012, industry bosses told...

HOUSE prices will continue to slide until 2012, it has been claimed, as construction chiefs were told the industry will never be the same again.

Yesterday’s figures also show that lending to the construction industry soared from €10 million in 2001 to €115m at its peak.

The statistics were revealed at the Construction Industry Federation (CIF) conference in Cork.

Labour party leader Eamon Gilmore said that the industry will never again employ the same number of people as it did two years ago.

He said there will again be a demand for new housing but he wants a construction industry – like any other – that is sustainable.

At its peak in 2007, the industry employed 280,000 direct employees and a further 120,000 indirect, equivalent to 19% of total employment.

Today it employs 200,000 but the CIF said that another 100,000 direct and indirect jobs could still be lost.

Mr Gilmore also said there is huge scope for reform in Ireland’s planning laws.

This news comes as the federation looks for powers to be allowed to reduce wages in the sector.

It said wage costs in the construction industry are "extremely high" compared to the wage costs in manufacturing industry.

CIF president Andy O’Gorman said it is important that there is flexibility in the Registered Employment Agreement to allow wages be adjusted or to have an "inability to pay" clause inserted as is available to employers in other sectors.

At present if a construction company cannot pay wages it is put out of business, he said.

Foreign Affairs Minister Micheál Martin, who also spoke at the conference said the proposed National Asset Management Agency (NAMA) is not a bailout for developers.

The CIF said construction output will fall to below €10bn in 2011, down from a peak of €36bn in 2006.

In 2010, it is expected that the industry will build 10,000 new homes, that is 80,000 less than the output in 2006 and substantially below the level of 45,000 to 50,000 identified as the medium to long term required level, according to the CIF.

It said the pipeline of new public sector construction projects is somewhere between €500m and €1bn this year, which it said is a far cry from the €6bn needed to achieve the Government commitments set out in April’s budget.

Mr O’Gorman said the "interim period" created by the NAMA announcement is causing particular problems, with banks unwilling to lend against viable projects before the transfer of loans, good as well as bad, into the new agency.
"Add in falling public and private investment and construction is experiencing its perfect storm," he said.

The federation also urged a Yes vote in the upcoming Lisbon referendum.

It said it is important to remember that Ireland’s success in attracting high quality foreign direct investment has been largely predicated on its access to the markets of Europe.



Report by Niamh Hennessy - Irish Examiner

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