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The Irish Are Ready To Party

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Businesses across the Irish Republic are getting ready for the rush.

People in Dublin are planning how to spend their windfall

Newspapers are publishing special supplements. Savers are planning their dream holidays, their home improvements, or even some plastic surgery.

The reason for this promise of consumer hyperactivity?

The Special Savings Incentive Account (SSIA), which has inspired the question "What will you do with yours?" in pubs and at dinner tables around the country.

Over the next year, more than a million accounts will mature, unleashing savings of about 16bn euros ($20bn, £11bn).

Little wonder that many business owners are relishing the prospect.

The idea for SSIAs, as they are known, was pretty simple.

The deal was probably unique in world terms, so we had 1.2 million people saving when the working adult population was close to two million

Finance guru Eddie Hobbs

Savers could tuck away up to 254 euros every month for five years.

The government then topped it up by 25%, so for every four euros saved they chucked in another one.

The money could go into a range of accounts - investing in shares, for example - so the money piles could grow even further.

Many people are looking forward to receiving more than 19,000 euros.

Big spenders

Eddie Hobbs is perhaps the Irish Republic's best-known financial guru, with his own successful TV show.

He has written a book about SSIAs, trying to advise those who find themselves with a wad of cash and are not sure of what to do with it.

"It was a simple, straightforward deal that everyone could understand," he says.

"The deal was probably unique in world terms, so we had 1.2 million people saving when the working adult population was close to two million."

The Irish finance minister expects people to be prudent

Consumer behaviour is likely to see some changes in the coming months.

Some are predicting that many brides will hang on until 2007 to get married, in order to use their cash bonus to fund an even more lavish day.

At De Paor Designs in Dun Laoghaire, south of Dublin, the owner, Gay Power, has already noticed a change in bridal behaviour.

She recently bought in some more expensive, Italian silk dresses, which sell for more than 3,000 euros.

She has had no problems in selling them, and puts the increased spending down to the promise of maturing SSIAs.

A few miles away, Gerard O'Farrell surveys his gleaming new range of Jaguar sports cars and saloons in his showroom.

I think that people will reinvest, they will spend some money, some will take a foreign holiday, so the economic impact need not be as detrimental as people seem to think

Irish Finance Minister Brian Cowen

Mr O'Farrell is managing director of Jaguar Ireland, and he thinks some savers will use their windfalls towards the cost of buying the car of their dreams.

"With their last purchase, they were saying to us, 'When the SSIA comes through, I know which model I want.' We are now seeing them coming through the doors and fulfilling their dreams," he says.

Luxury holidays and home improvements and extensions are likely to be popular as well.

The savings scheme was introduced by the previous Irish Finance Minister, Charlie McCreevy, who is now a European Commissioner.

The government's stated aim was to encourage people to save, whatever their income level.

So the SSIA was a way of nudging people to put a bit aside for the proverbial rainy day in a country awash with relatively new-found wealth.

Political opponents suggested it was a populist measure designed to grab votes.

Either way, the take-up was astounding, as the various products on offer proved overwhelmingly popular.

The startling Irish economic growth rate has brought increased disposable incomes and such spin-offs as rapid property price rises.

Pockets of severe poverty do undoubtedly remain, but Ireland's economy as a whole has seen a period of growth which has outstripped that of its European counterparts.

But the concern remains that the SSIA bonanza will simply bring inflation, pushing up prices in a range of sectors as savers become spenders.

Brian Cowen, Mr McCreevy's successor, thinks it willl not, as his figures suggest that only a quarter of the total being paid out will be spent.

Most of it, he believes, will be rolled into pensions, or further savings accounts.

"I think people will be responsible and prudent with their money," he says. "They usually are.

"I think that people will reinvest, they will spend some money, some will take a foreign holiday, so the economic impact need not be as detrimental as people seem to think."

So what is he going to be spending his windfall on?

Laughing, he insists it is his wife who spends the money, and that she just gives him enough for a couple of pints.

so i guess the great house boom in ireland will continue for a while yet

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At De Paor Designs in Dun Laoghaire, south of Dublin, the owner, Gay Power, has already noticed a change in bridal behaviour.

wow, named with incredible foresight...

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The SSIA is creating good psychology as regards spending, the average punter is so wrapped up in the mania, that they will not see beyond it. House prices are rising at the fastest rate since the year 2000, and first time buyers are driven by the fear that not getting on the ladder now will leave them permanently unable to buy.

You can listen to Sunday Times writer Jill Kerby being interviewed on Newstalk this morning. Her message is rent, don't buy.

The interview is 13 minutes 40 secs into the podcast and lassts 5 minutes

http://www.newstalk.ie/podcasts/library/ed3105.mp3

PS. Anyone got any good hangover cures :D

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The Central Bank reported today that there was strong growth in Irish private-sector credit (PSC) 1 during April, when PSC expanded at an adjusted annual rate of 29.6 per cent.2 This is the highest rate since March 2000, surpassing the previous peak of 29.4 per cent in October 2005 and February 2006. The adjusted PSC growth rate in March was 29 per cent. PSC increased by €4.8 billion, bringing the total outstanding to €276.2 billion.

Non-mortgage credit continued to grow at a slower rate than mortgage credit in April, although the adjusted year-on-year rate accelerated to 29.4 per cent, from 28.1 per cent in March. The acceleration in the growth rate is due to base effects arising from a small increase in non-mortgage credit in April 2005. The annual rate of increase in credit card debt, which is included in term/revolving loans, rose to 17.3 per cent in April, following an average growth rate of 15.5 per cent in the twelve months to March 2006. This was the outcome of a larger than usual increase in indebtedness and a marked fall in payments received during the month.

More including graphs. . .

Central Bank says Irish Private Sector Credit surged to six-year high in April

http://www.finfacts.com/irelandbusinessnew..._10006052.shtml

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The SSIA is creating good psychology as regards spending, the average punter is so wrapped up in the mania, that they will not see beyond it. House prices are rising at the fastest rate since the year 2000, and first time buyers are driven by the fear that not getting on the ladder now will leave them permanently unable to buy.

You can listen to Sunday Times writer Jill Kerby being interviewed on Newstalk this morning. Her message is rent, don't buy.

The interview is 13 minutes 40 secs into the podcast and lassts 5 minutes

http://www.newstalk.ie/podcasts/library/ed3105.mp3

PS. Anyone got any good hangover cures :D

Green Bear, absolutely cracking link. I would urge others to listen to this. I'm astonished to hear a mainstream journalist telling people to rent and to let landlords subsidise their living costs.

Sadly it's too late for my Irish friends/colleagues that have all piled in recently :( I spend a lot of time in Ireland working at all those American companies that are propping the place up - Intel, HP, IBM, Boston Scientific, Guidant etc. I wonder how those companies will like paying the workforce in Euros with a rapidly depreciating dollar?

Edited by TW11

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The SSIA is creating good psychology as regards spending, the average punter is so wrapped up in the mania, that they will not see beyond it. House prices are rising at the fastest rate since the year 2000, and first time buyers are driven by the fear that not getting on the ladder now will leave them permanently unable to buy.

You can listen to Sunday Times writer Jill Kerby being interviewed on Newstalk this morning. Her message is rent, don't buy.

The interview is 13 minutes 40 secs into the podcast and lassts 5 minutes

http://www.newstalk.ie/podcasts/library/ed3105.mp3

PS. Anyone got any good hangover cures :D

Green Bear,

I listened to the interview too.

I'm not sure if you have already seen it, but Jill Kerby covered my story on renting v buying in the Leinster Leader a couple of weeks back (link below).

http://www.housepricecrash.co.uk/forum/ind...showtopic=30943

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The SSIA is creating good psychology as regards spending, the average punter is so wrapped up in the mania, that they will not see beyond it. House prices are rising at the fastest rate since the year 2000, and first time buyers are driven by the fear that not getting on the ladder now will leave them permanently unable to buy.

From earlier threads...

http://www.irishexaminer.com/breaking/stor...z&n=97701239&x=

31/05/2006 - 11:13:02 AM

Personal debt increasing at fastest rate in five years

Levels of personal debt in Ireland are increasing at their fastest rate in five years, according to figures published by the Central Bank today. The bank said total lending increased by 29.6% in the 12 months to April this year, the highest rate since March 2000. The increase is largely being driven by mortgages, which now account for almost 40% of the €276.2bn that Irish people owe to financial institutions. The Central Bank says if mortgage lending continues to rise at its current rate, the total amount owed will more than double in the next three years.

http://www2.myhome.ie/advice_news/article_...=0&news_id=1894

With the first payouts due in May, many financial experts are expecting a large chunk of the SSIA windfall to be invested in property.

...

Using an opinion poll survey, Goodbody's suggested that €5.2bn or 37% of the money in SSIA accounts will be spent with the remainder being invested, with the biggest investment expected to be in property.

...

In November Austin Hughes, senior economist at IIB Bank, said that although a series of rate hikes from the European Central Bank could hit the purchasing power of many borrowers, a much larger amount of money will be injected into the Irish property market when SSIAs mature.

...

However, he added that in comparison maturing SSIAs could add as much as €10bn to the property market in the next two years as maturing accounts are used as deposits for property purchases and for home improvements.

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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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