Good afternoon, it is February 3rd 2021 and here is your economic and market update from BlackBee.
- Covid-19 restrictions could reduce the supply of new houses by 8,000 this year.
- Central Bank of Ireland figures show an increase in Irish Household wealth.
The head of the Irish Home Builders Association has warned that the supply of new homes could be reduced by up to 8,000 this year due to the current stoppage in construction. Earlier this month, construction sites across the state were ordered to close as new Covid-19 restrictions came into place. Essential building projects were the only sites allowed to remain open. The director of IHBA James Benson said that it was likely to add to the states housing crisis and that a members survey highlighted that over 16,000 homes across 273 sites were put on hold. The estimate shortage of 8,000 as a result of the restrictions is presuming that there are no further restrictions post the 5th March. The latest Central Bank bulletin said it expected new home completions for 2021 to be between 21,500 and 23,500 in 2021, 23,000 less than forecasted prior to the pandemic. Mr Benson also said that we are going to see a significant impact on housing delivery in 2021 and into 2022 and beyond that. (Source: Irish Times).
New data from the Central Bank of Ireland show that Irish household net worth increased by 1.7% in Q3 2020 to reach an all time high of €831bn. A big build-up of savings and a small rise in the price of houses in combination with lower debt levels resulted in the increase in net worth of Irish households. The Central Bank admitted that this paper number may not match peoples real world experience however it does represent a big shift in comparison to the global financial crisis where household wealth declined due to a collapse in income, a plunge in house prices and elevated debt levels. In Q3 2020, Irish households suffered a €1bn reduction in wages however the reduction was more than matched by a €2.9bn rise in social transfers. The Central Bank of Ireland figures show a €1.3bn fall in consumption in Q3 which is a sharp contrast to CSO figures released last week that showed strong retail spend towards the end of 2020. Household savings increase by €570m in Q3 2020 and private sector debt levels fell. (Source: Irish Independent)
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Global Market Update
(as at close of markets 02/02/2021)