Construction Industry today

Hi all

well sitting at home watching the world becoming more scared by the day of swine flu, it seems that the major concern regards the economy is being put to pages 6 and 7 in the papers and news items. Just driving around town and monitoring sales in the housing market in Northern Ireland and you can see almost stagnation developing. The housing industry and now the commercial side is just grinding to a halt with no sign of the clouds of recession of blown away, in fact you could say that the clouds are still getting darker, and the thunder is now moving in.

The plan fact of the matter is that the economy is still in freefall in certain sectors, the main being the service sector and along with it the biggest and most powerfull of the drivers the construction industry, which is the barometer of a countries financial well being. Here in the North we also have a problem in that the Republic is in an almost tail spin regards housing prices and that effects the Northern property market as it is now believed that a number of large investments in property could be coming up for auction as more and more Southern companies fold.

Having spoken with many developers it would seem that they believe that there is a line that house costs cannot fall through as the building costs have not reduced any more dramatically than 5%. Materials, labour etc to put together in a property can be assertained to be priced on a bare minimal spec to come out at a set price. This then leaves floating equations such as the cost of land with relevant planning permision. The developers, especially the ones purchasing their land over the last 2-3 years, will fight vigourously in stating that this cannot come down below the figures they parted with at the dying days of the boom period. Many were looking very forelorn a year ago before the interest payments came down, and were counting only a few months till their cash flow dried up and eventual collapse of their empires. However the interest rates came down and their period of reprieve was extended to many cases I spoke to, a year or more.

Well time has passed and the lucky ones have managed to offload a lot of their debts by selling a few houses, others have practically given them away with clever marketing plans. However we are still not moving into a period where land can be bought, to erect a building and sell for a profit. Untill large amounts of housing land comes available at a price that provides the average joe to buy at house 3-4 times his salary (As banks are not going to lend over this anymore) were never really going to move forward. The economists will be heard piping up that because there is this shortage this will drive the privce back up, but then no one can borrow the money to fund that dream, and the market continues to stagnate further. To add further to the woes the properties selling in agents websites are so vastly priced from old day costs to revised for selling costs that it is very hard to see the real price a property is worth. Basically all you can go buy is what someone is willing to pay.

The only real short term quick solution that I can see is that a think tank puts together what a plot of land should cost, then universally revalues all properties using this formulae along we build costs that are known for various propertys. We then have a thought out price structure that everyone can move with in re-energising the property market.