Economics has a lot to say about market failure, its causes consequences and resolution. The government know these. Indeed, at the cabinet table sits a man with formal economic training, in Richard Bruton, who knows these things. If they don’t, or have forgotten, then a phone call to the Government Economic Service will refresh or remind. Yet, despite this they have determined to reinforce the failure in the housing market with more failure. What fresh hell is this? In an environment where we have record homelessness the government adamantly sets its face against the acceptance that the market alone cannot, will not, is not able to even if it wished, provide sufficient homes for people, whether rented or purchased.
all data from CSO…
Thanks to Mark Rose for this
The central bank of Ireland is rumoured to be interested in imposing loan to value limits, as well as loan to income limits, on mortgages. The objective here, it appears, is to try and cool down the housing market in Dublin.
A big part of the problem in the Dublin market, which is going gangbusters, is a shortage of supply. Lots of reasons given for this shortage of supply, such as the cost of house building is still too high relative to what can be achieved, the lack of serviced land, the willingness of banks to lend working capital for property development etc. Be that as it may, the supply-side issues will take time to work through. Will loan to value limits work? 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…