Weekly Market Insight

Latest Economic & Market Update 18th December 2020

21st December 2020

Good afternoon, it is December 18th 2020 and here is your economic and market update from BlackBee. 

Today’s focus:

  • The magnitude of the housing shortage
  • ERSI forecast of consumer spending will boost Irish economy

In a report for Daft.ie, Trinity College economist Ronan Lyons said that the low volume of properties for sale coming onto the market, combined with a fall in construction of new homes, has translated into an unprecedented scarcity of supply. In his report, Ronan Lyons highlights how the supply of housing on the market has never been above 20,000 properties since the pandemic began. At the beginning of this month, the number of properties listed was as low as 15,390. Housing supply has been a major issue for the state for a number of years and the scarcity of supply is seen when the number of properties currently listed is compared with the number of properties available in 2007/2008. In 2007, the average number of homes for sale was over 40,000, in 2008 it hit highs of 63,000. To add to the housing crisis, Ronan Lyons also highlighted how this lack of supply has translated into strong increases in house prices. Based on the list of prices of properties when they go on the market, housing prices have climbed nearly 7.5% in the year to December. This is the largest increase in three years. The affordability of housing has also been an issue, the lack of supply exacerbates this problem and strengthens the importance of social housing projects. (Source: RTE, Daft.ie)

According to estimates from the ERSI, lockdown has increased savings by €25.5 billion this year for Irish households. The ERSI also estimates that shoppers could spend an extra €9 billion next year as they tap into these savings giving a boost to the economy. They forecast that, following vaccinations and subsequently an easing of public health restrictions, consumer demand will bounce back sharply next year. This predicted spend would help grow the Irish economy by 4.9% next year, if the EU and UK strike a deal on Brexit. In the case of a no-deal Brexit, growth in the Irish economy is forecast to be 1.5% in 2021. Unemployment is forecast to remain high next year running at about 15%, with the expectation that it will fall to 10% in a year’s time. (Source: Irish Times, ERSI)

Best & Worst Performers of Large Cap US Stocks on Thursday
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Global Market Update
(as at close of markets 17/12/2020)