Why Ireland's housing bubble burst

> Edit: There is actually a breakdown by county if you scroll down the page. Dublin and Cork appear to be at 6 and 7% respectively.

So lower than the average in Ireland

I haven't looked at IReland's economics in forever, objective canadian observer. Lets see if i can find the cause.

Ireland has been in a recession for over a year. Realistically Ireland has been in a depression since covid started, but there seems to be some funny numbers coming out of ireland trying to hide the depression to make it just a recession?

Looking at their central bank's balance, Ireland the country effectively went bankrupt in October 2006. This is when their government hit up against the EU limits on spending. This is when the politicians had to either increase taxation or reduce spending. They chose neither.

Their country never recovered from the bankruptcy in 2006. So when covid hit they were unable to afford a response to it.

Ireland's 'stimulus' package was dissimilar to north american countries. Only months into covid they were urgently working toward getting people back to work. Ireland effectively prove to me they know their country is about to have a major depression in summer of 2020, not because of covid but because of their status going into the crisis.

They have low unemployment comparable to the 2000-2006 era.

But looking at 'participation rate' they increased by about 2%. This is very good for ireland. Infact, this is still trending upwards. The rate exceeds population growth and >10% youth unemployment. So this is the elderly returning to work. From an economic point of view this is a good thing, from a social point of view this is a disaster.

Interest rates are shocking. After 2006, when they went bankrupt, they started increasing rates? That's literally the opposite of what you want to do. 2008-2009 they abruptly reversed course. So in 2005, they were at 2%, in 2009, they were at 1%. Going the wrong direction here would have lasting damage on Ireland.

In 2011, they reversed course and started raising again. Which was very short lived. They screwed up bigtime for a second time.

2015, they had dropped to 0.05%. Then in 2016 they were at 0%.

So from 2016 to 2022, they were basically taking money from retirees to attract money from probably mostly out of country investors. Did it work? Yes, about $100 billion of $ came in and out of ireland on a regular bounce. Foreign investors basically pulled money out of ireland, reducing the wealth of ireland. Their actions delayed their depression, great success economically, but huge failure socially.

And in 2022 they started raising rates they stopped this and pulled the rug out from their housing industry.

In about 2030, Ireland will have to have -1% or worse rates.

Looking at household debts, it's shockingly low. Basically the young of ireland have decided against Ireland? That's shocking. Very south american like.

IReland in 2022 dropped their income tax from 48% to 40%. This too will be beneficial. I expect they will be required to reach into the 30% range by 2030.

Ireland's social nets have decreased about 60% over the last 30 years.

GDP per capita? Ireland is 4th most wealthy country in europe? No. That's not true at all. We shall see where they drop to after they are forced to deal with this ongoing depression. I estimate they will be poorer then portugal in reality.

>The only problem is nobody agrees what actually went wrong.

Seems 100% obvious to me what went wrong. It seems 100% obvious that the government completely understands what went wrong and that it's 100% their fault.

Lets in fact name names. Looking at the dates of major mistakes of government policy... https://en.wikipedia.org/wiki/Fianna_F%C3%A1il

Ireland's conservatives are largely speaking the cause of these problems. In fact, what it looks like is that they were causing problems intentionally to be the solution. They seem to be doing this because they are being elected on bad economy because the opposition are ideologically against the economy.

It appears that the next election they will suffer defeat to

https://en.wikipedia.org/wiki/Sinn_F%C3%A9in#Ideology_and_po...

If they keep this ideology when attempting to solve their depression. It's going to go extremely poorly for ireland.

>Here's what I would do as emperor of ireland.

Immediate balanced budget amendment requiring all governments to balance their budget.

~32% income tax.

withdraw from minimum corporate tax treaty, threatening to withdraw from a great deal more. Ireland-exit and Brexit alliance? Probably inevitable at this point?

Elimination of minimum wage.

Unionization on all non-irish owned corporations.

-2% interest rates temporarily.

eliminiation of all new taxes created in the last 20 years.

> This may be your misunderstanding. The 'equation', for lack of a better word, is supply and demand, not just supply. Market conundrums can normally be solved by change in either supply or demand.

> A shortage occurs when a situation prevents price from rising, thereby warding off a change in demand. This is where an alternative selection mechanism — examples including a lottery, needs-based, or first-come, first-served — will typically step in to solve the dispute given the constraints in supply.

Raising the price so high that demand disappears is not a way to alleviate a shortage. If 95% of the houses in the world disappeared overnight, that would cause an extreme housing shortage, even if it's a perfect free market where anyone with X amount of money can still get a house.

You can always find a point on the demand curve that fits any supply situation. That doesn't stop there from being shortages. "Shortage" is not a niche word that only applies when supply and demand has been prevented.

> Less information than what? As you can see, when we removed shortage in the above examples, the reader was left with the exact same information. No information was lost at all. Shortage added absolutely nothing.

This is like saying "If I give a three minute explanation, and also a 20 second summary, the summary added absolutely nothing."

The advantage of the summary is that you can use it in lieu of the full explanation and it's a lot quicker.

Yes it does. You're assuming that the median person's income should be affording the median home price. But that's incorrect because it doesn't take into account peoples' existing asset values. Again, if most people have 300k home assets, and then recently high income people competitively outbid each other to raise those assets to 600k prices, only the high income people were attempting to buy a small % of the homes. But, it raised everyone else's prices to 600k. Now they have that as equity, even though their incomes were still like 40k, they're not currently on the market attempting to buy a house, and when they do, they'll have existing 600k equity.

>In contrast, rents are a more reliable indicator of a shortage, no speculation there. Take a look at the Bay Area. One major distortion: property tax is fixed at the time of purchase. So all these people who bought a house in 1980 are paying yearly taxes at the 1980 rate. This compels people to hang onto the property at all costs, what a lucrative rental cash cow. Of course this also means tax revenue via property tax is skewed heavily to be paid for by new buyers. Imagine paying property tax on a 2 million dollar house, valued at 80K.

This creates (a relative) oversupply in rental houses in the area due to people who intend to hang onto their homes forever. Naturally the area is very strong in NIMBYs seeking to retain home value, plus the political environment, is people who love the environment, so they will shed no tears if no houses are built in order to protect and preserve the pristine natural empty fields of the region.

That's all to say the home buyer/seller dynamics in a region indirectly influence rental prices - vis a vis whether the person deciding to "not live in this house" chooses to simply sell the home or to rent it. This creates a little mini- supply/demand factor interacting with rental prices.