The world’s richest citizens are currently fretting about serious economic problems that ultimately have as their root cause spending too much. Elsewhere, though, there are more pressing problems. In particular, drought and famine in southern Somalia pose an almost unprecedented humanitarian crisis. This post attempts to put some scale on the crisis. Read more
This post analyses the information contained in the recent second “fire-sale” auction of Irish properties. By combining the auction results with an economic model of house prices, it’s possible to estimate how far auction prices are below the peak and below current asking prices. It’s also possible – using the results from the two auctions – to compare Dublin and the rest of the country: while asking prices have fallen more in Dublin, closing prices have fallen by less, and the gap between ask and close in Dublin is nearly half that of elsewhere. This suggests that “market thickness”, information and the proposed house price database matter. Read more
With the release of the latest Daft.ie House Price Report showing the average house price below €200,000 for the first time in a decade, this post examines three different ways of calculating what house prices in Ireland “should” be. The most straightforward way is to adjust house prices for inflation, but this may not reflect the transformation of the Irish economy since the mid-1990s. Two other methods – comparing to incomes and to rents – both suggest that the average house price should be about €150,000, a fall of 60% from the peak. If this is true, prices may bottom out in Leinster as early as next year and elsewhere by 2014. Read more