Saturday, January 17, 2009

Irish house prices to fall by 80 percent

I have seen some wild predictions, but nothing to compare with this one in the Irish Times. Morgan Kelly, a University College Dublin economist, reckons prices could fall by up to 80 percent. "Construction, but not demolition, of residential and commercial property will fall to zero for the foreseeable future," he said.

The casual observer might dismiss this kind of prediction as scare-mongering from a publicity seeking academic. Unfortunately, there is one killer fact about Ireland that makes the prediction credible - the country has something like a quarter of a million empty holiday homes. These houses are probably worthless.

80 percent? Could be; maybe; anything is possible.

HOUSING MARKET: IRELAND WILL see more demolition than construction of houses over the next decade, as the economy struggles to recover from the collapse of the housing market and the emergence of “zombie” banks, UCD economist Morgan Kelly told the conference. In a presentation that drew several collective intakes of breath, Mr Kelly predicted that house prices would fall by 80 per cent from peak to trough in real terms. Recovery will be slow: “It has taken us 10 years to get into this situation – it will in all likelihood take us 10 years to get out of it.”

4 comments:

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  2. "the country has something like a quarter of a million empty holiday homes. These houses are probably worthless." Couldn't we bung our Asylum Seekers into them?

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  3. Ah well, our property market has yet to notice, as per this attractive listing, but a snip at EUR 6.75 mm:

    http://www.daft.ie/searchsale.daft?search=1&s[cc_id]=ct1&s[a_id]=pc4&s[mnp]=&s[mxp]=&s[bd_no]=&s[search_type]=sale&s[furn]=&s[refreshmap]=1&s[sort_by]=price&s[sort_type]=d&limit=10&search_type=sale&id=389528

    But RTE Radio has taken to playing numbers such as this below, (lyrics only), from Mary Poppins. The more "self-amortizing canals", the better!

    If you invest your tuppence
    Wisely in the bank
    Safe and sound
    Soon that tuppence,
    Safely invested in the bank,
    Will compound

    And you'll achieve that sense of conquest
    As your affluence expands
    In the hands of the directors
    Who invest as propriety demands

    You see, Michael, you'll be part of
    Railways through Africa
    Dams across the Nile
    Fleets of ocean greyhounds
    Majestic, self-amortizing canals
    Plantations of ripening tea

    All from tuppence, prudently
    Fruitfully, frugally invested
    In the, to be specific,
    In the Dawes, Tomes
    Mousely, Grubbs
    Fidelity Fiduciary Bank!

    Now, Michael,
    When you deposit tuppence in a bank account
    Soon you'll see
    That it blooms into credit of a generous amount
    Semiannually
    And you'll achieve that sense of stature
    As your influence expands
    To the high financial strata
    That established credit now commands

    You can purchase first and second trust deeds
    Think of the foreclosures!
    Bonds! Chattels! Dividends! Shares!
    Bankruptcies! Debtor sales!

    Opportunities!
    All manner of private enterprise!
    Shipyards! The mercantile!
    Collieries! Tanneries!
    Incorporations! Amalgamations! Banks!

    You see, Michael
    Tuppence, patiently, cautiously trustingly invested
    In the, to be specific,
    In the Dawes, Tomes
    Mousely, Grubbs
    Fidelity Fiduciary Bank!

    ReplyDelete