Double Trouble On Fuel, House Prices

Irish Independent

22.05.2008 

By Charlie Weston, Fiach Kelly and Jason O’Brien

CONSUMERS were dealt a severe double blow yesterday with new figures highlighting an accelerating plunge in house prices and a sharp rise in fuel costs.

Last night economists warned that consumers will have to “tighten their belts” and avoid all luxury purchases if they want to ride out the economic slowdown. Figures from the latest Permanent tsb/ESRI index revealed that house prices fell by 1.1pc in April, bringing the annual decline in property prices to 9.2pc.

And an Irish Independent survey showed that the price of diesel has shot through the €1.40 barrier — it has now increased by an average of 9c a litre in just two weeks.

Friends First chief economist Jim Power said: “I wouldn’t be recommending to anybody to be going out there taking debt on board at the moment or living beyond their means.

“Definitely we are in a belt-tightening environment for the next couple of years. Anybody who behaves differently is being very naive and foolish.”

Our survey of fuel costs shows the price of diesel now outstrips that of petrol. The average price at the pumps is now €1.41. The corresponding figure for petrol is €1.30.

The latest figures follow on from a similar survey carried out by the Automobile Association (AA) less than two weeks ago which showed the average price of diesel at €1.32.

And, in the same period, the pump price of petrol jumped from just shy of €1.25 to €1.30.

Hauliers, school bus operators and fisherman all warned yesterday about the knock-on effects of the rising price of diesel.

Jeopardy

Hauliers threatened to stage protests, while school bus operators said up to 600 routes were in jeopardy because of rising fuel costs. The housing gloom deepened with the monthly rate of decline accelerating in April as buyers and sellers decided to stay out of an uncertain market.

The average price paid for a house in April was €278,521, a drop of €28,000 from a year ago. But the fall in new-house prices has been even more severe, falling by 2pc in April or double the national rate of decline.

Friends First’s Jim Power criticised what he termed ‘official’ Ireland — the Government and various state agencies — for continuously trying to talk up the economy when employers and consumers were increasingly aware of the harsher reality.

“The Irish economy is going through an incredibly painful housing adjustment and that was always going to be painful because we had become totally addicted to housing as a driver of everything in the economy, from employment to tax revenues to economic activity,” he said.

“Things are pretty dire out there in the economy at the moment,” he said.

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