The construction industry clearly doesn't like all this talk about a building boom. There is no boom, it says. "The current upturn is not a boom, it is a strong recovery from years of recession". The Oxford dictionary defines a boom as `a period of prosperity or sudden activity in commerce'. By that definition, what is happening in the construction industry, and especially in housing, comes pretty close. If it looks like a boom and it feels like a boom . . . Meanwhile, the Government yesterday expressed confidence that "the construction boom will continue".
The industry and the Government were responding to the annual review of the construction industry and the message therein is upbeat, to put it mildly. The Construction Industry Federation, in dismissing notions of a boom, is talking things down with a purpose. Private investment in construction has spurted ahead but government investment in infrastructure has lagged behind. The point is valid.
The spurt has been quite phenomenal. Building output grew by almost a fifth last year to reach £6 billion. In the last three years it has climbed by nearly 50 per cent. As the Minister for the Environment, Mr Noel Dempsey, pointed out, this increase is not only unprecedented in the history of the State but it is unmatched in any other EU member State. But before we get too excited, it must be recognised that this enormous increase sprung from a very low base, relative to the rest of the EU, and the increase is not all good news.
Spending on tourism (principally hotel development) accounts for a disturbingly high proportion of the increase. It rose by almost 70 per cent last year, a level of increase which is entirely unsustainable; it will be followed by a decline of 16 per cent this year. Agriculture-related building grew by 44 per cent last year; this year it is expected to decline by 20 per cent. The Government expects spending on productive infrastructure to climb by 28 per cent this year but much of that will be once-off projects. The regional spread of building activity is broadly consistent with the spread of population but this means that the gap continues to widen between well-developed regions (particularly Dublin) and those less developed. The Government should also bear in mind that buildings last for a long time. Much has been built in designated areas with poor architectural input (or none at all) and skimping on quality materials - despite the receipt of very generous tax incentives.
The construction boom needs to be managed with care. There is more to it than counting the cranes on the skyline. It is driving up the cost of land, labour and materials. It has exposed serious skills shortages in the building trade. Mr Dempsey talks about a shortage of blocklayers and bricklayers; the shortages spread wider than that. The annual income threshold for local authority housing (of which not enough is being built) is stuck at £12,000. The Government's grant for new house buyers was introduced to stimulate demand for private housing, the demand for which now could hardly be stronger. The continuance of the grant cannot be justified.