Residential houses prices have fallen dramatically within Ireland since 2007. Recently published data on the housing market on NI revealed that house prices in NI have fallen between 50 and 60% from 2007-2012 (RICS August 2012). A similar situation exists in RoI according to Irish rates agency Moody who stated in June 2012 that house prices have fallen by 49.9% between 2007 and 2012.

Mintel’s latest report on the Irish Construction Market highlighted that despite these improvements in affordability, market activity remains strained by poor economic conditions, fears about job security and lack of access to credit. Furthermore, the residential housing market in both NI and RoI is set to fall further in value terms in 2012 with Mintel predicting that the market will contract further as a result of a falling number of new builds coupled with decreasing house prices.

Falling house prices mean that many mortgaged home owners have had to get used to the idea that they will be in negative equity for the next twenty years due to buying property at inflated prices during the ‘boom’ years. Levels of negative equity will continue to rise as house prices are forecast to fall a further 20% from today’s levels (Moody June 2012) resulting in affected consumers being less likely to move up the home owners’ ladder opting instead to improve their existing abode.

What’s next for the Irish construction industry?

Repair, maintenance and improvement work will help to keep the residential housing sector afloat in 2012. Approximately 80% of work within the private residential sector within RoI in 2011 was reported to be in the repair, maintenance and improvement sector (Chartered Surveyors Ireland 2012). Likewise, within NI, repair and maintenance output increased by 10.3% in the Q1 2012, compared to the same quarter in 2011 (Department of Finance and Personnel – July 2012).

This links into Mintel’s Home of the Senses trend where consumers are now cocooning inside their homes. Consumers increased focus on their homes offers a boost to the DIY market as they become more inclined to renovate their homes rather than sell up. Opportunities for services focused on the home improvement/renovation market including designing and fitting out interior space are more limited due to the higher financial outlay required. Mortgages in arrears for more than 90 days stood at 10.9% at the end of June 2012 having risen from 10.2% at the end of March 2012 (Central Bank August 2012). As the level of mortgage arrears within RoI continues to rise consumers will look to low cost improvements to their homes.

Thus even with falling prices within the residential housing market, the short to medium prospects for the residential market remains subdued due to strained consumer finances and a high level of negative equity within the marketplace. However, the repair, maintenance and improvement market is more positive showing signs of growth as many consumers resign themselves to the fact that moving house is not an option in the foreseeable future prompting them to focus on improvements within their existing homes.

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