The forecasts of Irish economic ‘experts’ have proved to have all the accuracy of sticking a pin in the list of runners in the Grand National. Even when the Credit Crunch was biting at the end of 2007, there was still insistence that Ireland would have a ‘soft landing’, that house sales would hold up, that there would continue to be growth in prices. The voices of George Lee and David McWilliams dissented, but they were shouted down by a chorus of voices who insisted that these party-poopers were wrong and that the ‘fundamentals’ justified massive inflation in the housing market. Every morning RTE would give airtime to voices who seemed genuinely to believe in constantly rising markets.
Facing the prospect of working well past 65 to get a proper pension; having lost much of a legacy that was invested in ‘blue chip’ shares; talking with people who, unlike me, live with real daily fears of losing their job; there is not much inclination to any longer listen to ‘experts’. Instead, more attention will be paid to people who actually know what is happening in towns and villages far removed from Dublin offices and radio studios.
So, what is the “I was talking someone who said” Economic Index pointing to? Perhaps a flattening of the downward curve.
A friend in Co Laois, observed the first signs of the end of the housing boom in October 2005; that was the month when the interest payable on a buy to let house mortgage in his town first exceeded the potential rental yield from such houses. This led to a decline in demand and the beginning of a fall in prices; as prices started to fall in similar towns, where buy to let sales had fuelled the boom, the decline would begin to ripple inwards. The property bubble was already beginning to deflate before the ‘Credit Crunch’ of 2007. Websites like Irish Property Watch and The Property Pin were tracking the end of the boom years on a daily basis while the siren voices denied such things were happening
What’s the call from Co Laois this week? Traditional business is doing traditional business, as it always has. Many of the houses on the new estates are lying empty, never having been occupied. Those who kept their hands in their pockets during the boom years still have money to spend, but will spend it carefully, as they always did. There was never much ‘Tiger’ in the town in terms of shiny motor cars and designer labels and its disappearance will be hardly noticed.
Further west, a friend who is a retailer in Co Tipperary says trade is holding up well and that it is when he comes up to Dublin that he encounters the ‘Sale’ sign repeatedly in shop windows. “We had never much of a boom, anyway”, he said on Monday. He agreed with a management expert from Co Wicklow, who was at the same meeting, that the frenzied obsession with stories of gloom was probably exacerbating the situation.
So who do I believe? The commentators and analysts who continue to be paid, even when their opinion is laughably wide of the mark, or people whose livelihoods depend on making the right call?