A Brief Reminder: Macroprudential Conference this Friday, January 29th

Details of the macroprudential bank regulation conference this Friday are here. The conference begins at 10 am with an interactive poster session and a chance to meet other attendees.

5 replies on “A Brief Reminder: Macroprudential Conference this Friday, January 29th”

The data on mortgage approvals imply they are having a pronounced impact here; approvals for house purchase down an annual 20.3% in final quarter of 2015. Dublin house prices fell 0.7% in q4 while ex Dublin rose 3.6% and an annual 10.2% in December.
Irish net mortgage lending has been contracting for 6 years.

Dan, Irish private residential property prices (excepting the top decile) have to decline by 60% – 70% of their current values, or median salary has to increase by 100%, for the two to have any chance of a “revert to mean”. Which is less likely to occur?

Basically, residential property prices are still way out of synch with the levels of incomes needed to ensure that mortage default rates will remain below 1%. We are in a very deep excavation on this one – and some idiots are still frantically digging!

Lets say we need 30,000 new residential housing units – not less than 5 km from the commercial centre of Dublin – to avoid commuter lunacy. Can you see this happening? I cannot.

Global House Prices: Dublin house prices seriously unaffordable … Michael Hennigan … Finfacts


An annual survey of house prices in several global locations has rated Dublin prices as seriously unaffordable while Limerick has the most affordable housing costs of all markets surveyed.

The 12th Annual Demographia International Housing Affordability Survey covers 367 metropolitan markets in nine countries (Australia, Canada, China, Ireland, Japan, New Zealand, Singapore, the United Kingdom and the United States). A total of 87 major metropolitan markets — with more than 1,000,000 population — are included, including five megacities (Tokyo-Yokohama, New York, Osaka-Kobe-Kyoto, Los Angeles, and London).

The survey, which is produced by Wendell Cox of Demographia, a US firm, and Hugh Pavletich of Performance Urban Planning, a New Zealand firm. … read more via hyperlink above …

“There’s no bubble, but housing crisis will take take time to fix” – [Dan O’Brien – Sunday Independent; 31st January 2016. Sunday Property Supplement, p4]

Dan, that non-existent private residential property price bubble is alive and well and …. Still inflating? Stagnating? Deflating? Hmmmm.

Time will not fix our residential property price bubble (+350% over 12 years). ‘Fixing it” requires the sort of political actions that are not characteristic of serving politicians. As I wrote above, we are in a very deep excavation on this one, and the usual suspects and their useful idiots are still frantically digging deeper and deeper.

There are two charts included in Dan’s piece: the first shows a plot-line of Residential Property Prices for Dublin v Outside Dublin (2012 thru 2015). Its the Dublin one that shows the aftershock ‘bubble’ characteristics – specifically from Mar thru Dec 2013 (+18%) and again, Apr thru Sept 2014 (+ 20%). The Mar thru Dec 2015 plot (+6%) probably lies within the outer limits of measurement error.

I expect that Dublin residential property prices may be further ‘juiced’ from Mar thru September of this year, but then what? A residential property bubble typically takes longer to ‘deflate’ than it takes to ‘inflate’. So, are we looking at post 2020 for a ‘normalization’? Is this even possible?

The second chart shows Monthly Mortgage Approvals, and it would appear that 2014 and 2015 show no overall, statistically significant increase. If 2016 shows a similar level of approvals, then it might be argued that the ‘market’ may have plateaued-out. But will it revert to mean? And crucially, how? We’ll just have to wait this one out.

One significant statistic in the article, attributed to Ronan Lyons is the +300% increase in overall construction costs from 1997, whilst labour and material costs rose by 70%. Anyone like to hazard some guesses about this significant difference in cost increases? – 230% is a sizable gap to fill-in. And perhaps someone could remind us of the corresponding increase in the Irish median (personal or household) disposable income from 1997 to date. 70% also?

Macro prudential is a noble idea but the Fed is anything but prudential, blowing the biggest bubble in the history of Finance.

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