Jump to content
House Price Crash Forum
Sign in to follow this  
Flash

Another Day, Another Warning (for Ireland)

Recommended Posts

From today's Irish Times....

ECB president warns Ireland to calm housing market

European Central Bank (ECB) president Jean-Claude Trichet has called on the Government to take steps to ensure the stability of the Irish housing market, writes Marc Coleman, Economics Editor.

Addressing MEPs on the European Parliament's Economic and Monetary Affairs Committee in Brussels yesterday, Mr Trichet said management of housing markets was the business of EU member states.

"There is a need to issue prudential warnings and messages that, combined with decisions taken at EU level, are incorporated into the economic cycles of EU member states," he said in response to a question from Fianna Fáil MEP Eoin Ryan. "The Irish authorities are aware of their capacity and influence in this respect and we are counting on them."

In response, Minister for Finance Brian Cowen said the Government would have to be careful in implementing any measures aimed at calming the housing market.

"The gradual phasing out of the tax-relief scheme is designed to avoid any sudden shock to the construction sector generally, having regard to the important contribution of this sector to Irish economic growth at present," Mr Cowen said.

He was referring to property-related tax-incentive schemes, some of which include a housing component.

"The Government continues to run a prudent, stability-oriented budgetary policy which gives us room for manoeuvre in the event of an economic downturn," he added.

Mr Trichet's comments come as a new review of the housing market shows house-price inflation rose to 13 per cent last May, compared with about 5 per cent last autumn.

It is now at its highest level since 2000, according to the review published yesterday by Permanent TSB.

The Opposition has rounded on the Government's handling of the housing market.

"Ireland is going closer and closer to the high-risk zone in relation to the economy's dependence on the construction sector," Labour's spokeswoman on finance Joan Burton said. "The Government are aware of that and are terrified.

"Fianna Fáil is so closely allied to political support in the construction sector that I'm not sure the Government can stand back and fine-tune the kind of change that would give the sector a soft rather than a hard landing," she added.

Fine Gael's finance spokesman Richard Bruton said the Government was threatening the economy's stability by ignoring calls for more stable management of the property market.

"The call from respected international bodies to manage pressures in this market more prudently are going unheeded," Mr Bruton said.

"A budget which raises spending at twice the rate of projected tax-growth increases pressure, so does release of SSIA money."

Share this post


Link to post
Share on other sites

When people are in a buying frenzy they are deaf to reason. IR cannot stop the buying because IR are very low and cannot change as one size has to fit all in the EC. Even if IR doubled it would make no difference because people can just borrow more. The Irish will end up pricing themselves out of business and then the job losses will begin and with that the HPC. My bet is that the HPC in IR will be worse than in the UK.

These imbalances will be the downfall of the EC and the Euro.

The clock is ticking.

Share this post


Link to post
Share on other sites

These imbalances will be the downfall of the EC and the Euro.

I can see Ireland and possible Italy being forced to leave the Euro by their squealing homeowners once rates normalise. Italy is being driven to the brink by the sheer incompetence of its economic leadership both past and present.

But there is no way their political classes would give up the gravy train of EC membership....

Share this post


Link to post
Share on other sites

The Irish have been getting warnings about their property market for years now. The trouble is, they hear the warnings but the market continues to rise. And rise. And rise. So the warnings have less and less impact even though the bubble is getting bigger. At least that is the only way I can understand it and that's what I gathered from speaking to some Irish people recently. A kind of crying wolf effect. I think that is a possibility here too - the message about HPC is getting through but people think they've heard it all before.

Edited by Immigrant

Share this post


Link to post
Share on other sites

This morning I was talking to a Dublin guy.My,the Irish are borrowing like mad.If it isn`t for a btl portfolio it`s for the latest 5 series.Madness abounds.Ex-council houses in an OK part of Dublin going for half a million euro!!!!!!!!!!!!!!!!!!!!!!Now it seems to be spreading north of the border.I get the impression that N.I has had a fair bit of hpi since I was last there a couple of months ago.

My bet is that Eire and Spain are right on the edge.Won`t take much for the whole thing to fall on it`s back.

Share this post


Link to post
Share on other sites
I can see Ireland and possible Italy being forced to leave the Euro by their squealing homeowners once rates normalise. Italy is being driven to the brink by the sheer incompetence of its economic leadership both past and present.

But there is no way their political classes would give up the gravy train of EC membership.

Not a chance. All the national debt of Italy and Ireland is priced in Euros currently. The traditional Italian trick of devaluing the currency would bankrupt the country because the national debt would immediately spiral upwards as soon as they left the euro. Similarly in Ireland, our huge current account deficit would cause a massive devaluation of the currency, which would be even worse here because of the relatively small size of our economy along with a resulting hike in interest rates.

We're all in it for the long haul now for better or for worse

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.