Keenan remembers how, in 2003, The Economist ran an article suggesting that Ireland’s property market was overvalued by 20%. There was a massive backlash, with one Irish newspaper quoting “evidence” from the director of an estate agency to “prove” the estimation was blatant scaremongering.
The same estate agent later threatened to pull advertising from the Sunday Times if it did not amend its market coverage more positively.
“The Market” column asked, at the time, if it was considered a form of heresy to express anything other than a positive outlook about our property market – pointing out that most of the “evidence” quoted against the Economist article only highlighted that Irish buyers continued to buy.
(And now we are all paying for it.)
Keenan said that current prices equate to those of the first quarter of 2002, and are still dropping by “a percentage point and a bit” each month. Meaning that if they continue to do so until the end of the year, the Economist’s 20% less of 2003 values will have been spot on. If however, he concludes, they keep falling into the following year, the Economist will have been guilty only of understatement.
I, for one, would love to know what the same Economist analyst would have to say about the Irish property market now… I imagine the price-drop forecast might be revised downwards still.
Certainly, that seems to be the view of Martin Walsh, ex head of lending of EBS between 1988-2003. He predicted in April 25th's edition of The Irish Times that prices could still be overvalued by 30%, and ran two graphs to illustrate - one showing price trends in Germany and Ireland (with an index set at 1996) and the other showing the ratio of house prices to average industrial earnings in Ireland since 1953. Walsh set the "average pre-bubble" ratio at 5.3%.
A picture, they say, speaks a thousand words. Is a graph not yet more verbose?
Both graphs from THE IRISH TIMES
6 comments:
There should be a third line in that first graph, showing the quality of newly built houses in Ireland. But probably the paper wasn't large enought to show all the very low sub-zero figures.
That's right, Pike. There doesn't appear to be a negative axis on the graph to facilitate that kind of data...
Sure - down a side st, off Grafton St, near the Church tourist office, I passed an estate agents window @ 2006- Just before the bubble burst.
2 German men were outside laughing. They said to me’ These house would only be 1/3 the price at home‘. Indeed- some photos were of teeny old artisan houses from around the Smithfield /Benburb st district. Is there a category of Economic Anthropologist ???
A field of study that traces the Rises and Falls of greed through history- and in society in general? Because Irish people are very decent at heart. However it Must be a truism that when leaders change quickly , e.g. countries that suddenly lose their colonial rulers like Ireland, carpetbaggers suddenly crawl from the woodwork. Or in countries so decimated by war there are no proper leaders- I remember that line from ‘Gone with the wind’ that after the American civil war the Deep South was suddenly full of carpet baggers. And the effect must be worse in a new state full of poor under educated people. HENCE the woeful tendency of our Homespun NavanCarpetbagger Class to squeeze every penny fromm the rest of us. EVERY AREA THE GENERAL POPULATION Can’t Avoid paying money : I.e. a roof over your head, whether buying or renting- or professional essential services such as health and legal services, Ordinary people are screwed over by cynical 1% rich class: WHAT kind of Fellow country men DO we have that they couldn’t be content with selling bad houses to their compatriots that were just 10%, 15% ,18%, overpriced but Much in excess of this?
NO thought that people would scrimp - would have to travel long distances out of Dublin as they couldn’t even afford to live there any longer, Commuting a desperate fact of life for many- and NO need for it if the huge amount of housing in the capital had been sold at reasonable cost?? It didn’t start 15 ys ago either:
I picked up a paperback in a charity shop , a Young Irish Person’s flat dwellers guide printed @ 1980. The opening line was ’ Rents in Dublin are nearly as expensive as New York or London…. ‘
As Jane Austen once nearly said ”It is a truth universally acknowledged , that a young country, newly free of its colonial shackles, ( and mot likely in possession of a potential fortune in its untapped wealth / natural resources/ undeveloped talents of its people) must be ripe for picking by beady eyed carpet baggers.”
http://zxcode.com/2011/05/the-mill-apartments-ballisodare
Pretty much sums up the state of post celtic-tiger Ireland.
Ballisoldare is a village about five miles (via dreadful roads) from Sligo. The more delusional inhabitants of Sligo (i.e. the ones who think they live in a city) refer to it as a "suburb"
Thanks for the link... Yes, when was it ever a good idea to built apartments there.
I remember the prediction of a "soft landing" for the Irish economy? Soft is right! It fell into a bog and drowned.
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