 Bring out the champagne and party poppers and breathe a sigh of relief, because apparently Northern Ireland is out of the recession.
The statement came from the chief economist working for one of NI’s ‘big four’ banks. However, the property sector should perhaps leave the bubbly chilled on ice, as the conveyancing industry is no way out of the woods yet.
For those not in the housing market, things can pretty much get back to normal, according to Angela McGowan, from the bank who said that the local economy has “pulled out of the recession in the second half of 2009.”
She added that economic growth was set to return before the end of the year but warned that “overall economic activity levels are still weak.”
Ms McGowan made the statements as the bank published its quarterly forecast. The report said that the local economy “stopped contracting in the third quarter of 2009” and predicted a marginal growth of 0.9% between October and December.
The bank forecasted that the “majority of sectors in Northern Ireland should return to positive growth in the last quarter of this year”, with the retail and hospitality sectors benefiting from increased consumer spending during the Christmas period.
However, it also reported that sectors related to the property market, such as construction, building products and conveyancing, have still not returned to growth.
The bank’s chief economist said the local economy was driven by several factors such as improved confidence in global recovery and government fiscal intervention.
She noted a peak in employment will follow: “Quite simply, labour market stability allows households to be less cautious with regard to expenditure.
“Confidence in public finances is also important for investor confidence, so government plans for fiscal control will play a key role in the recovery process,” she said.
Viewing 2010 as a whole, the bank said there was a risk of a “slight dip in economic activity in the first quarter” but forecast a “modest 1.2%” increase across the year, an upward revision since its last quarterly report.
Housing market at lowest ever
Figures have proved that conveyancing and the market industry is indeed struggling to cope in the financial downturn.
Many experts have even gone as far as suggesting the market has “bottomed out” with figures showing house prices have plummeted by a third from their peak.
A survey by a mortgage broker firm in Ireland, found that their view on the 36% house price drop is similar to their response in the last survey.
Economist Austin Hughes said this displays that there has been some bottoming out in prices in recent months.
“It would be dangerous to draw definitive conclusions in this regard in the light of the generally soft tone of activity reported in this survey. However, it can be argued that the survey at least suggests the pace of price decline has eased notably compared to the large adjustments seen earlier in the year. This would be the sort of development that might be expected as a bottoming out process begins,” he said.
Around one-third of the 160 mortgage brokers surveyed believe conditions remain “weak,” while a further 25% expect “sluggish” activity.
Overall the survey said the mortgage market will remain “difficult” through the first quarter of 2010 as tighter lending standards and unemployment concerns curb borrowing.
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