Wednesday, 24 April 2013

Housing problems - lessons from Ireland (2)

Some people like graphs, others don't relate to them, so here are some anecdotes to back up the previous post's graph of the Irish house price collapse.

My parents owned a house in a pleasant, middle class suburb of Dublin; my mother lived there until quite recently, when she had to move into care, and some cousins now live there. Four bedrooms, semi-detached, large garden at the back, rather rundown in decor (my ageing mother wasn't up to much house maintenance), but a good, solid, family home in a decent neighbourhood. During the house price madness, all the talk among my mother and her friends was about how much their house would likely fetch. Going by some local prices actually achieved, and the informed guesses of the neighbours - in a property craze, everyone becomes an expert - the house at the peak of the boom would have been worth something like 1.1 million or 1.2 million Euros. At the exchange rate of the time, that was about NZ$2.1-2.2 million.

That in itself gives you some idea of the scale of the madness. Over NZ$2 million for a  middle of the road family home? Even at Auckland's fancy prices, you can still get good family homes for a third of that.

And today? Dublin's housing market is rather moribund, but my spies tell me the family home would be lucky to fetch 400,000 Euros.

Second story: last time I was back in Ireland, a friend said, "Here, come and have a look at this". "This" turned out to one of the infamous "ghost estates" - farmland speculatively  redeveloped as housing during the boom, and in this case (as was typical of the others, too) consisting of tightly packed, high density houses in the middle of nowhere. Like many of the others, this development came on the market after the boom had started to implode. Not a single house sold: the entire development is empty.

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