Richard Curran: don’t choke on your cereal for Dublin price analysis economist at home

  • Richard Curran: don’t choke on your cereal for Dublin price analysis economist at home
    Independent.t. E.
    The output of newspaper Economics that the price of housing in Dublin 25 PCs overpriced compared to incomes, may cause many people to choke on their cornflakes before heading to work to get paid and to repay the mortgage.
    https://www.independent.ie/business/personal-finance/property-mortgages/richard-curran-dont-choke-on-your-cornflakes-over-the-economists-dublin-house-price-analysis-37264955.html
    https://www.independent.ie/business/article37264954.ece/49dc5/AUTOCROP/h342/2018-08-30_bus_43639699_I1.JPG

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The output of newspaper Economics that the price of housing in Dublin 25 PCs overpriced compared to incomes, may cause many people to choke on their cornflakes before heading to work to get paid and to repay the mortgage.

You may be about to buy a house and felt a chill run around my feet.

Because the publication is not only to count but also has an interesting and often accurate track record when it comes to writing about economic matters in Ireland.

An obvious precedent was the warning, in may 2003, the economic editor of the newspaper at that time that housing prices in Ireland was overvalued. It reiterated its comments in 2005.

The works in the article on Ireland, as a rule, to be fair, if not difficult, at times. In 1988 he was presented a special report on Ireland, describing it as a ‘poor rich’.

But predicting the future is quite another matter. In this article, ‘the Economist’ predicted that Ireland was heading for disaster. If uncorrected it probably was, but ‘the Economist’ has admitted that he sees no economic recovery in Ireland goes.

In 1997 he was included in Ireland on its cover with bright title ‘Europe light’. After 2003, analysis of housing prices, the newspaper probably could not believe that in a year Ireland was still economically ahead – let it rock.

In 2004, in his special report from Ireland subtly casts doubt on the foundations of our economic miracle and the new wealth under the heading of ‘Irish luck’.

Looking back, so much economic growth achieved in the period from 2000 to 2004 was a combination of luck and short-term political and banking reckless and not sustainable achievement.

When things went horribly wrong in 2008, ‘the Economist’ was quick to raise the question of the stability of our banking system with a known title, ‘Reykjavik on the map?’

So people make their latest findings on the housing market?

First, this is not a forecast that housing prices will fall. To say that they are overrated implies serious doubt on their ability to maintain these levels, but the newspaper does not say they will fall in the near future.

This analysis is part of a broader regular review of property prices in many capital cities, and is not a detailed analysis of the housing market in Ireland.

However, there is no reason to doubt the veracity of its valuation over the cost of housing prices in Dublin and if markets are rational, then housing prices should fall by 25 PC. The fact that housing prices in Ireland is not rational and not rational in nearly two decades.

Another factor is the original Economist analysis in 2003. Housing prices in Dublin increased after this year, rose amp; 35pc in the period from 2005 to 2007, before falling to 59pc by April 2012. Analysis of the work in 2003 was accurate, but early.

Newspaper in the current release compared to housing prices in the long-term median disposable household income. Conclusion, overrated came in the context of housing prices in other cities carried much greater risks than Dublin.

For example, it was found that prices in Hong Kong was 94pc overvalued by this measure. In Paris the figure was 70pc and Vancouver was 65pc. In London it was 50pcs.

The newspaper does not predict the imminent collapse of housing prices in these cities in the short term, but just using a valuable indicator for the sustainability of these levels have other factors, such as the change in wages.

In Ireland the danger of housing prices is very real, especially in Dublin. However, market dynamics are very different which would mean a very different kind of falling real estate prices this time if it occurs.

For example, while a mortgage is growing, it is not a debt-fuelled housing bubble. People are not as highly leveraged funds, since they were the last time housing prices soared.

The esri has calculated that housing prices in Ireland really took off on 431pc between 1995 and 2007, before they crashed on 49pc. Housing prices, particularly in Dublin, has been steadily increasing since late 2012 and rose estimated 92pc.

Those who borrowed money to Finance the purchase of housing in Dublin in recent years is not allowed to take out 100pc mortgages and therefore more insulation in case the housing prices are not falling.

This does not mean that it can’t hurt, but it doesn’t hurt as many people or as much. In a significant increase in housing prices was caused by supply shortage. This deficit was put at something between 20,000 to 40,000 homes a year. Inevitably, as the supply increases of the heat out of that market, suggesting that people are not allowed to take ridiculous amounts of money to Finance the purchase of homes on a large scale as they were last time.

100pcs in a mortgage it’s not like back in the near future. However, even the Governor of the Central Bank suggests that property prices may fall in coming years.

The fact that the growth of housing prices in this round due to a chronic lack of supply makes the housing problems in the social sphere as economic.

Economic consequences of rapid growth in housing prices is also very real. There may be another ‘Economist’ article, which had received as much attention as the study of housing prices.

In November 2017, he wrote about the poll of 13,000 foreigners, which put Dublin on the bottom of the fifth the list of the 51 largest cities in the world, ranked by quality of life.

Their main claim on our capital, ‘the Economist’ pointed out that was not “sudden collapse in the city, and the charm, safety, or convenience, but its high cost of living, and, in particular, it is difficult to find a place to stay”.

If we don’t sort out our housing problems in the near future, we will find it increasingly difficult to attract such investment required to maintain levels of employment and income supports mortgage loans people take out.

Threats to maintain high housing prices is real. The potential for hard British exit from the EU, to hit levels of employment, or broader, trade wars and income tax changes can undermine our foreign direct investment proposal.

Can be likely to cause to a softening in house prices from the most direct and the most obvious source of all interest rates.

They look at the turn and interest rates directly affect how much money someone can afford to pay for a house.

The issues around all of these factors, when and how much? There are some simple predictions that can be made with Donald trump at the White house and Theresa may at Downing Street.

So if you are going to buy a house and worried the most simple advice is the best. Can you afford it if interest rates rise; what to do, I want the property and how long you intend to keep it?

If you can answer all of these questions can probably be read ‘the Economist’ without choking on Breakfast.

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