Saturday, Oct 13, 2007
too much property built, falling tax revenues,
economist: Ailing Celtic tiger?
Ireland's economy may suffer from a property slump
"Ireland's property market is already showing signs of a correction. Estate agents report prices down in some areas by around 10% this year, and shares in companies with property market exposure have also experienced falls."
...particularly interesting "Unlike in the UK, homeowners have not cashed in on the rising value of their properties to fund spending, so the affect of a downturn would be muted."
Posted by mken @ 10:09 PM (243 views) Add Comment
3 Comments
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1. Icarus said...
It will be interesting to see what happens to Irish banks, which are more exposed to commercial and residential property than the Japanese banks were in the early '80s when that economy 'soft-landed' and couldn't take off again. Irish developers and builders are highly leveraged, their yields now don't nearly cover their loan repayments and capital values are falling. Another house of cards. Let's see what rescue package is cobbled together by the Irish Government.
Incidentally, the Irish experience of high leverage and over-extending in order to jump on the the rising capital values bandwagon demonstrates that 'sub-prime' is everywhere. You don't have to be poor to over-extend yourself on mortgage borrowing. If you think properties are going to rise by 20% why buy a £500,000 house and make £100,000 when you can, with difficulty and with lax lending, buy a £1 million house and make £200,000. Many in the middle and upper-middle echelons are 'sub-prime' and over-extended for this reason. The next 12-18 months will be interesting.
2. sold 2 rent 1 said...
"Unlike in the UK, homeowners have not cashed in on the rising value of their properties to fund spending, so the affect of a downturn would be muted. "
3. European-bear said...
Every commentator on every bloated house price bubble always says there will be a soft landing. But a soft landing has NEVER happened. Every house price bubble has popped.