What a difference a burst property bubble makes?

The Irish Examiner reported yesterday that house prices in Ireland are now the most affordable in 25 years.

WHAT a difference a bust property bubble makes?

While much of the decade was all about exorbitant house prices, latest figures show prices are now at their most affordable in more than 25 years.

It reports that the average first home buying working couple is now spending 12.6% of their disposable income on the mortgage in December 2010. In the second quarter of 1988 this figure was 13.8%.

ยป Most affordable house prices in 25 years – Irish Examiner, 28th January 2011.


  1. Shannell, there is a three page article on the Australian Housing Bubble in this weekend’s Australian Financial Review. While you have to watch how some of these figures are calculated, the article says “In the mid-’90s, a home owner in Brisbane, Melbourne or Perth typically spent 15% of their income on their mortgage”. “But in the late ’90s, mortgage repayments as a percentage of income began to grow, increasing in a steady line to about 40 per cent for all the major capitals just before the financial crisis.” Aparently Sydney hit 43% in 2003 and this is now considered the tipping point. So households can’t sustain much more than 40% of their income going into housing.

    It is also interesting to note this comment in the same article “A crucial area to watch will be first home buyers. When the federal government introduced the first home buyers grant and the Reserve Bank lowered interest rates, their average loan size leapt by about 25 percent in a year”

  2. Acc. to former colleagues in Dublin and Limerick, the “slide” in property prices is showing NO signs of stopping, not helped by recent political upheavals, and the probably empty “threat” of reneging on Bond payments.

    The problems for Eire are that if they DO decide to give investors a haircut, they can kiss future investment goodbye – Fund Managers have good memories!. Also the problem of being tied to Eurozone interest rates isn’t helping at all, so really there is no “silver lining” in sight right now.

    My colleagues never bought, and they are now finding rental to be “quite plentiful”, however the cost of living over there has become very scary – definitely not somewhere to be suddenly ill!!

  3. As we wait for the bubble to burst here in Australia prices (in Melbourne at least) continue to soar. By removing the government guarantee on bank deposits, the government will shift the risk to deposit holders and also possibly shift deposits to other financial institutions, thereby perhaps creating more “competition” in the housing loan market leading to lower interest rates thus further fueling the bubble. The supply side of the equation will probably also worsen as government red tape, imposed by “town planners” is still not providing the required land to meet demand. So given that the dollar remains strong the absurd bubble may continue to grow

  4. Fred, removing the guarantee on deposits will result in a flight from bank deposits to other investments, leaving less to be loaned for mortgages.

  5. Fred,

    (a) There is no supply issue, there is plenty of available housing stock, it is a greed issue, a delusional issue.

    (b) The garbage touted in today’s papers quotes prices from 2010, a standard tactic of real-estate con artists is to quote recent history, they won’t quote what has happened directly over the last few months because it tells a different story.

    (c) By the end of this year the truth will be so much harder to hide

  6. i agree romsey. There’s only so far that these propaganda artists can sweep things under the carpet. It’s like a leaking waterbed…they’ve managed to stop the few leaks with their thumbs, but in time they wont have enough thumbs to cover all the leaks…haha

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