Outlook for 2017
NO sooner had the Government planned to address the housing crisis than Brexit landed on our doorstep. Five months on uncertainty still reigns — and markets don’t like uncertainty. It will be another five months at least before the repercussions of the UK’s decision become clear.
Currently, the volume of property transactions is down 30pc in the UK, year on year. There is no way to sugar-coat this pill despite efforts to do so. The other cause of this dramatic fall-off in volume is the introduction of a 3pc stamp duty rate for second homes purchases which is helping to fuel a shortage of new homes in the UK.
The numbing result of the recent US presidential election has added fuel to the fire. With the inauguration date set for January 20, it will be early 2017 before we see how the new US president plays his card.
In terms of our economy, protecting our low corporation tax rate is of primary concern. However, it seems likely on both the US and EU front that it is only a matter of time before our competitiveness will be eroded. Only last week Hungary announced plans to reduce their rate to 9pc and it is unlikely to be the last EU country to do so.
For both the Government and the IDA, this development will be more of a concern for the next generation of FDI-type companies rather than the international firms that are already established here.
As we wind down for Christmas, the chat at this year’s property parties looks like focusing on what an extraordinary year it has been. Still, for the Irish property market it has been, for the most part, a positive year with transactions likely to be in excess of 40,000 — not too far off those of 2015.
Predictions for 2017 have been in the order of increases in house prices of up to 10pc, following the somewhat surprising Central Bank announcement last week.
The fundamentals look strong for 2017 and, domestically at least, the outlook is bright. Interest rates remain low. Unemployment has fallen to 7.5pc, nearly half the figure of 15pc it hit in 2012.
However, if you look at what is evolving politically and economically both to the east and west of our small economy, you might guess that next year could be very unpredictable.
As a nation, our population comprises of less than 1pc of the total EU figure of 743 million. While the domestic market will ensure upward pressure on property prices, external factors may play an even greater role.