House prices are a major taboo
Published 04/02/2010 | 05:00
It used to consume hours of conversation at bus stops, restaurant tables, water coolers and even outside church gates. It used to animate Irish people like no other subject, but suddenly it is socially, and now economically, inappropriate to talk about house prices.
Last week the Central Bank's top team of forecasters were asked a simple question by reporters. Where did the futurologists of Dame Street think house prices would be a year from now?
The forecasters looked sheepish and replied that forecasting asset prices in general is a highly inexact science, never mind crystal ball gazing about the residential sector.
This is probably true, although it didn't stop many economists during the boom from sermonising on how house prices simply couldn't drop because of Ireland's runaway population growth.
The strange thing now, of course, is that nobody seems to think it is important anymore how house prices move.
It is as if consumer's sense of their own wealth has decoupled from the issue of what their main asset is worth. Of course, this is nonsense. Consumers always 'feel' more wealthy if their house in going up in value, even if this feeling is totally illusory.
While the Central Bank and others are no longer prepared to make a call on house prices, they are prepared to make firm calls on when consumer spending will recover.
This is a mystery; surely one needs to know about one to know about the other?