ESRI: Kids Playing with Crayons
Jun 18th, 2012 by Donagh
The future development of the Irish housing market will play a significant role in determining the pattern of the long-term recovery of the Irish economy. While the housing market may never return to where it was in the boom years, some recovery will eventually take place. The timing of this recovery, including the timing of the turnaround in house prices, will play a role in determining when output in the economy returns towards its long-term potential. Activity in the housing market is influenced by a range of factors including incomes, prices, price expectations, interest rates and affordability. It is not possible to forecast when a turning point will take place but this note considers evidence on some of the variables which might help bring about a stabilisation in the market.
From the ESRI’s ‘Special Report‘ co-written by the brother of a well known Irish estate agent.
Probably worth pointing out that apart from being the pet think-tank of the state the ESRI also functions as a consultancy for hire to the private sector to produce economic research which is supportive of the needs of whoever is writing the cheque. That’s part of its remit.
Very true. It’s frustrating still to hear them cited as an authority, but probably that’s my fault for listening or reading those who cite them.
The only sure assertion these ESRI boffins could make is this:
There will be growth in the Spring… and some people will make lotsa money.
State-supported wafflers living in a statistical galaxy light years away from the rest of the citizenry.
Michael Burke has an excellent post on Paul Hunt/Progressive Economy about the recent ESRI report which whined about the ineffectiveness of stimulus, while trying to argue that paying of odious bank debt by selling off state assets is a worthwhile thing to do.
Very telling stuff Donagh.
I have a weird feeling that Alan McQuaid of a brokerage formerly known as Bloxham actually was straight enough fairly recently to state on the record that any turnaround in housing markets would be a symptom not a cause. He also pointed out that until there was growth (which he didn’t equate as synonymous with a turnaround in the housing market) and stability in employment nothing would change one way or another. I may be wrong, it may not have been McQuaid. But whoever it was light years ahead of that stuff from the ESRI.
He very well might have there WBS, but back in January 2010 he had this to say:
Overall, I expect house prices to be higher on average in 2011 than in 2010, and should rise on a five-year view as the labour market returns to normal.”
http://www.daft.ie/report/alan-mcquaid
He’s quite clear in seeing growth in the labour market - not only that, there is an implication that Ireland didn’t really have a bubble, that prices were in some way set by wages and demand and that the fall in price was a result of a fall in employment and demand.
Absolute nonsense of course. Ireland, Europe and the States went through a 15-yr asset price bubble, one that scooped up house prices via the mortgage market from Los Angeles to Budapest.
It was fairly obvious to anyone who would see it that the assumption that Ireland would return to labour growth in a time of internal deflation was just self-delusion - and the prediction made by lefts/progressives that deflating an economy during a recession is economic suicide was the correct one.
I don’t see any ‘in fairness to mcquaid’ in his track record WBS, but, then again, I don’t have your kind nature