Our habit of throwing money around like it’s going out of fashion has only been reinforced by the dawning realisation that a slowdown in the property market may mark the beginning of an end of an era. The construction industry has been the engine of the Irish boom, and the levelling off of prices in recent months will have negative knock-on effects elsewhere in the economy. While there is no evidence yet of a freefall in property values, the possibility of price plunges and an accompanying collapse in house-building activity remains very real, with potentially devastating results.
The prospect of at least two further interest-rate rises before the election will also dampen sentiment in a market that has become notably less bullish in the past year. Always a background preoccupation, the fate of property values is likely to become an even greater popular obsession in 2007.
While house price rises have faded, inflation seems set to become the other defining feature of the year ahead. Provisional estimates suggest our inflation rate is likely to rise from 4.4% to 6% in the short term, and a further destabilising climb cannot be ruled out……..
We are embarking on a period of considerable challenge and no little uncertainty. As the election approaches, voters will have much to contemplate. The game is on, and it’s all to play for.