Consumer Market Monitor Q2 2010 Released - First time buyers cash in on property slump 

Dublin, Tuesday, 27th July 2010: The Marketing Institute of Ireland (MII) and UCD Michael Smurfit Graduate Business School launched the Consumer Market Monitor Q2 results today which show that a mere 7,000 new mortgages were issued in the first quarter of 2010, at a value of €1.22 billion, with first time buyers accounting for almost 55% of the total market in value terms. The monitor, which tracks key indicators of confidence and activity in the Irish consumer market, highlights there has been a 30% decline in mortgages compared to the previous quarter (Q4 2009), but property prices are falling by 3.4% nationally, thereby allowing first time buyers to get their foot on the property ladder. Click here to download the full report. You can also visit http://www.mii.ie/cmm/ to view previous editions of the report.

Consumer confidence has been recovering slowly for several months with the level in June 2010 (-11%) double that of June 2009 (-23%).  This positive trend in consumer sentiment has had a knock on effect on the optimistic predictions in GDP of 1% (up from -1.3%) and GNP, which is expected to stabilise at -0.75% (up from -1.5%). The consumer market which accounts for 63% of GNP, is an important indicator of the health of the overall economy. These figures predict a brighter future for consumer spend, as a slower rate of decline is expected for 2010 at 1.5%, and a return to a modest level of growth of 1.1% projected for 2011.

“The Consumer Market Monitor Q2 results demonstrate that consumer confidence has been recovering slowly but steadily. These figures suggest that consumers sense an improvement in economic conditions and are becoming less anxious about their own circumstances,” said Mary Lambkin, Professor of Marketing, UCD Smurfit School. “This upward trend has resulted in a positive step forward for Ireland, which is now back in line with the European average.”

Personal sector credit in 2010 has declined every month so far, declining by 1.5% in May 2010, following a decline of 1.4% in April, and 1.5% in March. Residential mortgage lending, which accounts for 85% of personal credit, reached €148.5 billion in outstanding loans in March 2009 but has declined every month since then. In May 2010, it tumbled by €352 million, bringing the annual rate of decline to -1.8% and leaving the total amount of mortgage credit outstanding in May at €145.8 billion.  This trend correlates to the level of personal saving which reached a high of 11% in 2009 and is expected to stay above 10% until 2013, but will reduce to around 8% thereafter.

Overall retail sales (excluding motor trade) have stabilised this year proving to be an encouraging sign, however volume sales have displayed no change year on year to May 2010. By comparison, retail sales in the UK have rebounded strongly in 2010, up 2.2% in volume and 4.4% in value year on year to May and US retail sales are forecasted to increase by 2.5% for the year 2010 as a whole suggesting Ireland’s economy may climb on the back of US success and experience a knock on affect. 

One consumer trend which we continue to see in the Consumer Market Monitor is the scale of new car sales, which were up in the first half of this year by an encouraging 45% year on year:
67,846 compared to 46,715. Of this figure, 7, 368 cars can be attributed to the scrappage scheme to the end of May. The sector has experienced such a positive turn that sales previously predicted at 70,000 for the year have had to be revised to 100,000, with the scrappage scheme estimated to account for 10,000.

Retail sectors that have experienced a growth in sales include: Department stores(7.4%), Furniture and lighting (19.5%), Electrical goods (0.5%), Clothing, Footwear & Textiles (13.2%), Pharmaceuticals, Medical & Cosmetics (0.7%), Food stores (2.6%), Hardware, plants & glass (6.5%), Household equipment (6.1%). However a number of sectors showed continuing decline, notably, books/newsagents down by 6.6%, and pubs were down 13.2%.

Tom Trainor, Chief Executive of the Marketing Institute of Ireland said, “Q2 results clearly illustrate what an enormous impact clever pricing strategies can have on consumer behaviour, one such industry that this is evident is the car industry. Irish consumers are beginning to grow in confidence again and loosen their purse strings, which can be seen in the rise in average transaction values for retail sales”.