One of the nicer things about Ireland is the Phoenix Park. Amazingly tame deer, looking good nowadays w full antlers (‘pointy things on them heads’ as the toddler declaimed)
In a country that is only 4% urbanized to have a scarcity of land for building takes quite some doing. It takes generations, generations in which the political class, and those who elect them, ignored best interests of long-term planning; The budget next week as an opportunity to begin to undo some of this, but is vanishingly unlikely that will do so. Continue reading
I have written a number of times about the usefulness of the Phillips GSADF test for bubble detection. It has been used extensivly for bubble detection. google “gsadf bubble” if you dont believe me. So… Continue reading
so…. another CSO release of house price statistics. Recall that a bubble is where prices deviate fundamentally from their warranted levels. We know that there are massive supply constraints in the dublin region so we should see house price appreciation. But this much? The largest ever year on year percentage rise ? We are back to the madness it seems.
Here is my old friend SupADF…. Remember when Mr SADf crosses Mr 95% from below, its BUBBLETIME. So technically not a bubble but give it time… these figures should be a very large bucket of cold water in the face of government insouciance about back to the future…
And on it goes. The latest house price data from the CSO indicate the two Irelands continuing to diverge. On one hand we have Dublin (and to some extent the rest of the urban areas) growing like gangbusters, while on the other hand the stagnation intensifies in the rest of the state. This is clear in both house prices and in other economic aggregates. Our geospatial policies are, and have been for decades, next to non existent. Governments have been too timid, too fearful of shortterm backlash, to put in place a meaningful strategy for growth around designated poles accompanied by real policies for the remaineder. Instead we have the irish version of Laissez Faire – Lackadasical Fear.
Is there a bubble in the Dublin house market? The latest figures might well give one pause for thought, with a 22% year on year increase, clearly unsustainable.
However, this may not be the entire story.
A newly developed statistical technique (see here and here for previous posts using it to talk about bubbles in London and Bitcoin) has, it is claimed, good power to detect bubbles. Below see the results for real dublin house prices, 1996 prices, for new and second hand homes.
We can interpret these as a bubble being present in the series when the blue line exceeds the red line. It clearly picks up the last bubble period, and interestingly dates its beginning to the 1997-1998 period. What it also shows is that there seems to be no such bubble at present.
This is only a statistical test – it is by no means definitive. What is clear is that bubble or no, Dublin prices in nominal terms are rising unsustainably fast.
What is your thought reader?
House prices (defined here as all houses, national and dublin) have been rising steadily for some time now, since Q2 2012 in fact. And earnings (All sectors, average weekly wage) ? Not so much.
But im sure it will be fine. Wont it?