The bust after the 2007 property price boom in Ireland has left its scars. As a second bubble is swelling Peter Manley warns that people shouldn’t lose out again to profiteers.
When the Irish property bubble finally burst with the inevitable price crash in 2008, Irish Banks were left insolvent, the developers downed tools and walked away. A lasting legacy of the Celtic Tiger days is Ireland’s abundance of partially completed “ghost” estates or land designated for housing development. Ireland inherited a glut of housing stock, unfortunately many of the estates turned out to be located in areas with very little genuine demand for housing. As an owner/occupier in one of Ireland’s many unfinished rural housing estates, I look on with a certain amount of scepticism and wonder at the current housing crisis in Ireland and what looks like the start of yet another property bubble.
In 2017 the Irish economy grew by about 5%, outpacing all other euro-zone countries for the fourth successive year. The turbo-charged economic recovery has sent sending per-capita GDP to a remarkable sixth in the world. This puts Ireland well ahead of Germany (ranked 23rd) and the UK (ranked 30th). The recovery is largely driven by the export sectors such as pharmaceuticals, biotech and business and computer services. But let’s not forget that the recovery in GDP is in part a consequence of foreign firms simply posting profits in Ireland to exploit the low corporate tax rate.
“But let’s not forget that the recovery in GDP is in part a consequence of foreign firms simply posting profits in Ireland to exploit the low corporate tax rate”
Despite remaining largely unchanged during the second half of 2017, Dublin house prices are now up 61% from their post-2008 low point. The re-emergence of the property porn section in Irish newspapers is indicative of the new bubble. Another Irish property bubble may well appeal to those who profited from the previous one (who understandably want more of the same), while those still trapped in negative equity could be floated to safety. And perhaps even ghost estates in Tipperary might be completed. In short, a bubble appears like a wealth-creating miracle to many. But where there are winners there are also losers – the symptoms are already visible.