Skip to main content

Property Bubble Caused By ‘Mistakes’...

The property bubble was partly fuelled by political and regulatory mistakes, education minister Batt O’Keeffe has admitted.

Addressing the Construction Industry Federation (CIF) conference and dinner last Friday night, O’Keeffe said that those in positions of leadership in the construction industry had the ‘‘opportunity to help shape the future of the sector in a way that acknowledges the mistakes of the past’’.

He listed those mistakes as ‘‘the failure of the Central Bank and Financial Regulator to properly control lending practices and the failure of the private sector, including developers and bankers, in amassing wealth without adequately considering the longer term implications’’.

He also admitted to a ‘‘failure of politicians to curb a culture of one-upmanship and target-driven greed in the banking and property sectors’’.

O’Keeffe said that the annual construction industry review and outlook, to be published this week, ‘‘will not make for happy reading’’.

It will show that almost two thirds of the total drop in employment in the economy since the peak of the boom has been in construction.

Direct and indirect employment in construction dropped by 32 per cent from late 2008 to early 2009, according to the review figures.

The value of output in the construction sector fell from €37.4 billion in 2007 to €32 billion last year, and is expected to drop to just under €20 billion this year.

While the cost of living rose by almost 40 per cent from 1998 to 2007, construction workers’ weekly wages rose by more than 80 per cent.

‘‘The harsh reality is that earnings across the economy will now need to moderate in the medium term, as we move to regain our competitive edge," said O’Keeffe.

He also said that there would be ‘‘no easy terms’’ for developers under Nama.

Meanwhile, CIF director general Tom Parlon has described Nama as the best solution to the current liquidity crisis and predicted that it would operate successfully and make a profit.

‘‘It is innovative, novel and brave," he said. ‘‘There is risk attached, but I personally think the government and the NTMA [National Treasury Management Agency] have been conservative in how they’ve set it up. I believe it will be successful and return a profit."

Parlon said that, while there was a view that Nama was ‘‘a bail-out for the developers’’, the truth was that they would ‘‘have to pay back every penny’’ they owed.

‘‘The only solace Nama gives developers is more time to repay loans," said Parlon.

He criticised ACC Bank for pursuing loans to developer Liam Carroll, but said that, ‘‘if it wasn’t for Nama, Irish banks would possibly be acting in the same manner’’.



Report by Niamh Connolly and Nicola Cooke - Sunday Business Post

Popular posts from this blog

Ireland's Celtic Tiger Excesses...

'Bang twins' may never get to run a business again... POST-boom Ireland is awash with cautionary tales of Celtic Tiger excesses, as a rattle around the carcasses of fallen property developers and entrepreneurs will show. Few can compete with the so-called Bang twins for youth, glamour and tasteful extravagance. Simon and Christian Stokes, the 35-year-old identical twins behind Bang Cafe and exclusive private members club, Residence, saw their entire business go bust with debts of €9m, €3m of which is owed to the tax man. The debt may be in the ha'penny place compared with the eye-watering billions owed by some of their former customers. But their fall has been arguably steeper and more damning than some of the country's richest tycoons. Last week, further humiliation was heaped on them with revelations that even as their businesses were going under, the twins spent €146,000 of company money in 18 months on designer shopping sprees, five star holidays and sumptu

Property Tycoon's Dolce Vita Ends...

Tycoon's dolce vita ends as art seized... THE Dublin city sheriff has seized an art collection and other valuables from the Ailesbury Road home of fallen property developer Bernard McNamara. The collection will be sold to help pay his debts. The sheriff, Brendan Walsh, is believed to have moved against the property developer within the past fortnight, calling to his salubrious Dublin 4 home acting on a court order to seize anything of value from his home to reimburse his creditors. The sheriff is believed to have taken paintings from the family home along with a small number of other items. The development marks a new low for Mr McNamara, once one of Ireland's richest men but who now owes €1.5bn . The property developer and former county councillor from Clare turned the building firm founded by his father Michael into one of the biggest in Ireland. He is the highest-profile former tycoon to date to be targeted by bailiffs, signalling just how far some of Ireland's billionai

I fear a very different kind of property crash

While 80% of people over 40 own their own home just a third of adults under 40 do. This is disastrous for social solidarity and cohesion Changing this system of policymaking requires a government to act in a way that may be uncomfortable for some. Governments have a horizon of no more than five years, and the housing issue requires long-term planning. The Department of Public Expenditure and Reform was intended to tackle some of these problems. According to its website its remit is to “drive the delivery of better public services, living standards and infrastructure for the people of Ireland by enhancing governance, building capacity and delivering effectively”. So how is the challenge of delivering homes for people in 2024 and beyond going to be met? The extent of the problem is visible in the move by companies, including Ryanair, to buy properties to house staff. Ryanair has, justifiably, defended its right to do so. IPAV has long articulated its views on how to improve supply an