| Economists' Property Poll 2003 |
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| The retail property sector is set to grow by 3.3 per cent per annum over the next five years, out-performing the residential sector, which is forecast to grow by 3 per cent in this, the seventh annual FINANCE property survey. |
Residential property prices will grow by 17 per cent over the next five years, according to some of Ireland’s foremost financial services sector and property economists.
This is significantly down on last year’s five-year forecast of 27.2 per cent, reflecting the bearish sentiment among forecasters.
The economists were asked to provide two scenario forecasts, one bullish and one bearish. The bullish forecast is based on the market reaching its maximum potential growth and is based on such assumptions as interest rates remaining relatively low and immigration being of the order of 25,000 per annum. The rate of growth predicted under this scenario is 35 per cent.
The bearish forecast assumes the most pessimistic conditions such as supply exceeding demand and higher European interest rates, and this forecast predicts a rate of decline of 13 per cent per annum. This is the first time that this forecast has been negative over the past three years.
Asked to weigh the probability of either scenario, the consensus went for a bullish outcome, with a weighting of 68.9, while the bearish scenario got 31.1 per cent, which is almost exact as the 2002 survey, when 68.1 per cent was bullish, and 31.9 was bearish.
This year, for the first time, the survey includes predictions on the commercial, retail and industrial sectors. Austin Hughes is the most bearish on these three sectors, predicting a decline of 5 per cent p.a for commercial property, 2 per cent p.a for retail, and 3 per cent p.a. for industrial.
The participants are: Eoin Fahy, chief economist, KBC Asset Management, Bernard Feeney, manager, Goodbody Stockbrokers, Austin Hughes, chief economist, IIB Bank, Dr. Dan McLaughlin, chief economist, Bank of Ireland, Eunan King, senior economist, NCB Stockbrokers, Alan McQuaid, chief economist Bloxham Stockbrokers, Jenny Pollock, senior bond analyst, AIB, Jim Power, chief economist, Friends First, Rhona Brennan, head of residential research, Gunne Group, (who responded to the residential property questions) and Marie Hunt, head of research at Insignia Richard Ellis Gunne (who responded to the commercial property questions). |
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| Article appeared in the April 2003 issue.
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