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gruffydd

Irish Independent Calls For Housing Bubble

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How long before the English Independent produceds an article like this?

extracts -

........... the average cost of a new home in Dublin is €384,000, or more than 12 times the average industrial wage.

One reason for the recent acceleration of house prices is that mortgage lenders have eased credit conditions, by offering in some cases 100 per cent mortgages to borrowers. Borrowers themselves may well be anticipating the maturing of their SSIA accounts, when €16bn will be accessed over the next 12 months, and clearly some of that money will be spent in the housing market, thereby pushing up prices further.

What we have seen is a huge increase in the value of the Irish housing stock, now valued at an estimated €530bn, in a very short time. And that has left the domestic economy vulnerable to a sharp correction in the housing market. Ireland, as a small open economy, is clearly at risk from adverse developments in the world economy, whether these be transmitted in the form of higher interest rates, or by higher oil prices depressing demand, or from a sharp depreciation in the dollar, which might precipitate a global recession.

And yet in the current atmosphere of general euphoria in the Irish housing market, all such future risk is largely discounted while some very unrealistic assumptions are now being made by some borrowers about the likely rate of future increase in property prices. History shows, however, that asset bubbles inevitably burst, and with painful financial consequences for those who are then left holding those devalued assets.

Our high degree of dependence on the health of the broad property sector constitutes not only a significant risk for the economy, but also reflects a serious imbalance within the economy, and one that should be addressed.

Edited by gruffydd

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Err... bit late, it's always somebody elses fault when it gets to this stage. I blame those bloody foriegners, not enough of them have come to Dublin in order to prop up the BTL market, inconsiderate bastards :angry:

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Open mike debate 'When Will the Property Bubble burst in Ireland' held on Thursday last and hosted by David Mc Williams. A panel consisting of a couple of agents a lady BTL acolyte and a bearish jurno.

I've attached the podcast I'd suggest listening in at 1:40 when an audience member responds to a comment.

Podcast

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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