A neighbour across the fields in Co Down used to tell of going to a horse race meeting with a group of friends from work.
Lurking around the entrance was a man offering brown envelopes at £1 each. These envelopes, he claimed, contained tips for the winner in each race on the card that day. My neighbour and his workmates bought envelopes for the fun of it. When they opened the envelopes they discovered that each contained a different list of horses.
“None of us would have admitted being taken in and backing a loser, but when we got a winner we would have said that the man was a great tipster.”
The financial tipsters are pointing in one direction. The economy is being talked up. Growth is being talked up. Even property prices are being talked up by government measures to restrain rent rises and to provide token numbers of affordable houses because those in the open market will not be affordable.
Yet the signs are worrying. Even without the financial crisis from 2008 onward, Ireland would have been in trouble. The continuing expansion of the economy had come to depend on an unsustainable property boom. The boom would inevitably bust.
Circumstances now are very different. Property prices are being driven by a demand which has not met with an adequate supply. But markets always reach an equilibrium, a point where prices inhibit further demand and, as supply increases, the prices begin to fall.
After 2008, the financial tipsters said there would be a “soft landing.” They said there would be a gradual decline in prices back to a more normal level. Of course, that did not happen. Markets are not rational, once a fall begins, many people are driven by sentiment.
The Irish property website myhome.ie includes pages that report the latest price changes. The changes are not trends, they are specific prices relating to specific properties. It is not a matter of abstract market data, it is cases of real people making real cuts in the price they are asking for their properties.
Before the last crash, only one economist, David McWilliams, was suggesting that all might not be well with the Irish property market, that the boom would be followed by bust. His views were vilified by others, including the then Taoiseach.
This year McWilliams has made repeated warnings that there are problems ahead. He has warned there is no value in the housing market, but the prices have gone on upwards. The Myhome.ie pages suggest that McWilliams may be proved right again, but who is going to admit to being twice taken in by the financial tipsters?