Tonight’s TV seems calibrated for an IrishEconomy.ie audience. To keep you all away from reruns of America’s Next Top Model after the news, we’ve got Richard Curran’s Property Crash, Where to Now?, and then The Frontline, both dedicated to the national obsession. Let’s hope the programmes are informative and advance the debate people across the country are having about property and its role in the Irish economy, now and into the future. Let’s also hope against hope that those debates are evidence-based. In that spirit, a nice piece of accessible research on the duration of housing cycles has just come out from Phillipe Bracke at the IMF. Bracke surveys 19 countries, including Ireland, and finds that:
On average, upturns are longer than downturns, but the difference disappears once the last house price boom is excluded. In terms of length distribution, upturns (but not downturns) are more likely to end as their duration increases. This duration dependence is consistent with a boom-bust view of house price dynamics, where booms represent departures from fundamentals that are increasingly difficult to sustain.
Table 2 on page 9 of Bracke’s study is also very interesting. His analysis squares with the findings of Edward Leamer for the US economy, and those of Morgan Kelly in his 2007 Quarterly Economic Commentary piece on the likely extent of price falls in the housing market, and in his subsequent work on the Irish Credit Bubble.