House Prices II

June 22, 2010

Yesterday I showed that house prices were roughly double their true value by the time the boom reached its peak.  This raises two questions. Firstly, why did they rise so far above intrinsic value and stay there so long? Secondly, will they fall further?
The answer to the first question is psychology. Even when it is [...]

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Rent or Buy?

June 21, 2010

Ronan Lyons is one of Ireland’s foremost property economists. His blog is well worth reading. A particularly interesting post is here, where he calculates whether it is worth renting or buying now. His analysis seems inline with what I outlined in the previous post.
His conclusion: better to rent.

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House Prices

June 21, 2010

One of the key aspects of the current economic difficulties is the crash in the housing market. Before discussing exactly how this has contributed to our problems, it is worth asking how far prices have to fall. Is it a good time to buy a house or will prices fall further?
The graph below shows my [...]

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Bank Executives’ Salaries

June 18, 2010

Following the publication of the two reports into the banking crisis (more of which later), there has been some discussion about the appropriate level of salaries for bank. Since the banks screwed up so badly, surely the salary cap should be rigorously observed? It is difficult to complain that a salary of €500,000 is too [...]

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Triple Whammy

June 18, 2010

The reason why things seem so bad in Ireland is that we have been hit by three nasty shocks simultaneously. These are:

Global Credit Crunch (now turning into a sovereign debt crisis)

Domestic Housing Bubble

Public Sector Budget Crisis

Any of these on their own would have had an adverse impact on the Irish economy.  Each on its own [...]

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NAMA’s Powers

June 11, 2009

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