With CPI figures showing inflation at -5%, the real return on saving has climbed to a 16-year high. A property-specific real rate of interest can be calculated from the mid-1970s on. It shows that over the whole course of the Celtic Tiger period, real property interest rates were negative. The real cost of borrowing for property now, however, is 15% – higher than at any point for which we have the figures.
Long-run real interest rates for Irish property, 1976-2009
Some links for today, on the topics of consumer confidence, so key to underpinning everything from jobs to VAT receipts at the moment, Google trends as a source of data, and commodity market integration (particularly in times of deglobalization).
A quick look at prices across the different sectors in Ireland reveals a far more interesting pattern than the typical assumption of slowly rising prices would suggest. Clothing and communications prices are at levels similar to those in the 1980s, while ‘deflationary episodes’ are becoming more common in Ireland every decade.
Typical change in prices, by sector, 1990-2009
