In Bermuda, new housing is rarely criticised, except perhaps on environmental grounds.

Demand for housing has long outstripped supply. The major reasons for this is the Island's limited size and a combination of rising affluence and shrinking average household sizes. So even though the Island's population has not grown dramatically, demand for housing has.

On the rental side, that has been exacerbated by the policy barring non-Bermudians from buying homes (thus creating a much larger rental sector than would normally be the case) and by housing allowances at the top end which have tended to pull up rents.

But there's a good deal of evidence around right now to suggest that the days of soaring rentals are over, at least for now.

Rents have fallen and seem to be falling further as expatriates lose jobs and leave the Island as a result of the recession. Coupled with that is the increase in supply of homes, in both the public and private sectors.

Anecdotal stories of homes and apartments going unrented for months and landlords having to accept lower than expected rents are becoming more commonplace.

Having said that, projecting future housing needs is exceptionally difficult. One of the reasons for Bermuda's housing crisis in the late 1990s was the recession in the early 1990s, after which construction slowed. When the economy took off again, housing construction lagged.

However, given that this seems to be a worse recession, and given that there is still a substantial amount of Government-backed housing still to come online, it makes the plans to build 100 homes at "Victoria Place" in Dockyard a somewhat dubious proposition.

There is no argument here about the merits of replacing the 25 or so homes at Victoria Row, which have been sub-standard for decades. But at first glance it seems imprudent to build 100 homes at a cost of some $38 million at this stage in the economic cycle.

It may be that in five years time, this scepticism will have been proven wrong. But one would hope that a full projection of Bermuda's likely economic outlook and housing demand will be carried out before this project gets underway.

To be sure, the project is planned in two phases. At the very least, care should be taken not to undertake the second phase if the demand is not there.