Property market to have soft landing - Ahern

 

Taoiseach Bertie Ahern has blamed the slowdown in the property market on election promises about stamp duty and said that "soft landing" conditions will return after the general election campaign, writes Arthur Beesley, Senior Business Correspondent, in Druid's Glen.

Arguing that non-residential construction activity was on the increase, Mr Ahern said the reduction in residential construction was not going to create any difficulty for the economy.

He offered no insight into Fianna Fáil's likely policy on stamp duty but blamed the market slowdown on a proliferation of promises on the tax from other parties.

"On the other side of the election we'll get back to normality. And I think that normality will be the soft landing. The construction projections were that we will move from something like 93,000 houses to 80-something. Now that's not going to create any kind of a difficulty," he said.

"I suppose the quicker we get out of the election situation, the market will moderate itself and it will bring itself back to the norm. The slowdown is because of inordinate amount of promises and I think people are not too sure what to believe - whether they'll see stamp duty abolished, all €1.2 billion of it, or whether they'll see some change."

He also played down suggestions that a construction slowdown would have a negative impact on the growth potential of the economy if large numbers of immigrant workers left the State.

"Most of the people, mainly young people, skilled people, that are in the economy, a lot of them are transient anyway. Already the figures show that a lot of the Poles and the Czechs, Lithuanians, Latvians, come here, work very hard for a sustained period, but it is a period and their intention is to return home.

"So I think if there was a downturn you would find a lot of people would move on. Obviously, there's another reasonably strong proportion will stay here. And obviously it's a topic of discussion at the moment if the residential comes to a soft landing. We're already seeing the non-residential sector taking off quite substantially so I don't see other than a soft management of this issue."

Mr Ahern remarks came after an address to the Irish Management Institute annual conference, in which he pointed to his Government's pro-business record.

"I have had the honour to lead an administration over the last 10 years which has been consistently ready to engage with project promoters, amend legislation, introduce and adapt policies and, above all, engage fully and listen carefully to the business community and key project promoters," he said.

In an upbeat assessment of conditions in the Irish economy, Mr Ahern said that "far too many voices" were predicting doom and gloom of one kind or another.

"It is, of course, right that we should understand the scale of the challenges and threats we face. Unfortunately, some of what we hear is a reminder of the bad old days when we assumed that Ireland was destined to be a second division player, spancelled by the burdens of history and the limitations of geography."

In an acknowledgement of business concern about over-regulation in the economy, Mr Ahern pointed to Government efforts to relax the regulatory burden on companies.

"It is not a matter of less regulation but smarter regulation. We have to balance the legitimate objectives which Government is expected to pursue. What we need to keep in sight is the result that we want to achieve and be flexible in choosing the means which will be effective at least cost for business," he said.