Saturday 3 December 2016

There is no question: we are in midst of another bubble

Published 25/07/2014 | 02:30

House buyers are under pressure
House buyers are under pressure

MANY mainstream economists argue that Dublin is not experiencing a house price bubble at present. They are wrong, just like they were wrong last time.

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There is no malice in most cases; they almost certainly believe what they say. The problem is that the data they are using to formulate their opinions is faulty while their definition of what constitutes a bubble is limited.

Loose credit is not the only way to create a bubble; illogical government policies or short-term supply constraints can also push up prices in the short term by creating unnecessary shortages. That's a bubble in most people's book if by bubble, you mean something that can be pricked with a pin and explode.

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