Thursday 14 December 2017

There is no bubble - but housing's still a headache

Property dominated the national conversation again last week. Dan O'Brien discusses bubbles, bad data and social housing policy

Defiant: Housing Minister Simon Coveney keeps publishing debatable completion figures, which could be working against the objective of increasing housing supply Photo: Damien Eagers
Defiant: Housing Minister Simon Coveney keeps publishing debatable completion figures, which could be working against the objective of increasing housing supply Photo: Damien Eagers

In April 2007 - 10 years ago to the very month - residential property prices peaked. The huge bubble in house prices, which had been inflating for years, then began to deflate. It happened slowly at first but as 2008 dawned it began to happen quickly.

By the time the bottom was hit five years later, the price of the average Irish home was less than half of what it had been in April 2007.

In April 2017 there is again talk of a bubble. Last Wednesday saw the publication of February's official home price figures. They showed that residential prices were more than 10pc higher than a year earlier. Double-digit increases of the kind currently being experienced are bad in many ways and would, if the February rate continued, bring prices back to the peak of April 2007 by the end of 2020.

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