Comments on: How important is unemployment for house prices?

By: Where is the housing market going in 2012? | Brian M. Lucey

Where is the housing market going in 2012? | Brian M. Lucey — Sat, 07 Jan 2012 07:51:07 +0000

[...] , inflation have all been seen as important drivers. See here for Central Bank analysis on this, here for an analysis of the importance of unemployment. The most recent IMF analysis suggests that [...]

By: Ste - statusireland.

Ste - statusireland. — Tue, 14 Jul 2009 08:02:22 +0000

The correlation between property and employment levels aren’t really surprising. We Irish seem to love property as our core investment vehicle. Even now, after everything that has happened, we are living on concrete IV looking for that bounce in the market (we’ll more than likely have a dead cat bounce first – early next year).

By: Ronan Lyons

Ronan Lyons — Fri, 03 Jul 2009 14:19:28 +0000

Hi Seamus,
Thanks for the comment – the idea here was not to prove beyond doubt that changes in unemployment cause changes in house prices, but rather to show that a very strong relationship has existed between them in Ireland over the past generation. Perhaps I should have left the reader free to consider what the most plausible explanation for this is – there may be some other variable that causes both, for example, or indeed as you suggest changes in house prices might cause changes in unemployment. To me, the most plausible explanation is this graphs shows demand-side factors have had a huge influence on house prices – but of course to prove that conclusively, I would need a fancier economic model (which unfortunately negates my first point above!)

By: seamus

seamus — Fri, 03 Jul 2009 14:04:02 +0000

Ronan,
although you do include the caveat that correlation is not causation, the rest of your piece seems to be based on the premise.
Couldn’t you try to predict unemployment based on house prices as much as the other way around?