Category: Prices

Martin Walsh on Residential House Prices

This article by Martin Walsh in the Irish Times has some convincing analysis (unfortunately the graphics are not shown in the on-line version), and some thought-provoking comments on the Irish government policy conundrum regarding residential house prices.  As Martin Walsh notes, to minimize expected future (state-owned) bank losses and Nama losses, policymakers must hope that prices have now fallen to their steady-state equilibrium level.  But for the purposes of restoring competitiveness, continued house price decreases would be better. 

“… it seems that there is a real dilemma at the heart of national policy. Do we prioritise competitiveness by bringing house prices back into line with incomes or keep them inflated in the hope of reducing further losses to the banks and Nama (National Asset Management Agency), as well as containing the extent of negative equity?”

Most importantly, by most long-term metrics, current house prices in Ireland still seem to be above sustainable levels.  

What actions (if any) should Irish policymakers pursue regarding stabilizing the residential housing market, and to what ends?    

IMF deal can change Irish legal system for the better

An article by Eoin O’Dell, Trinity School of Law explains how. You can read it here.

National Consumer Agency report on grocery prices

Details of the latest NCA report on grocery prices here. Highlights include the fact that the prices of branded grocery products fell by 14% between between January 2009 and July 2010, the fact that there is almost no difference in the cost of a basket of branded grocery goods between the four main retailers (including SuperValu) and the fact that price competition in the Irish grocery market mainly takes the form of promotions and special offers and by juggling small price changes on specific items.

Six stores were visited, but because the multiples (though not SuperValu) operate a policy of national pricing, prices in any one store are representative for the group as a whole. The data collected is made available in an accompanying spreadsheet, although the link did not appear to be working when I accessed it this morning. The discounters Aldi and Lidl were not included in the survey. Conor Pope in his analysis piece on the survey in the Irish Times today suggests that retailers may be able to `play´ the survey by keeping prices low on the items likely to be included while giving prices free rein on less common items.

The NCA Chief Executive Ann Fitzgerald says that the findings suggest that competitive pricing is still not a feature of the Irish grocery market and to address this there is a real need for a new entrant to the market to offer consumers a real alternative. According to Paul Cullen’s report in the Irish Times, she called for a removal of the cap on the size of retail units under planning regulations, claiming this would stimulate competition by encouraging a big overseas retailer to come to Ireland.

In a variant of the glass half-full argument, one might argue that similar prices are actually a sign of a very competitive market and emphasise more the fall of 14% in prices of branded goods over the past 18 months. However, the previous discussion on this blog regarding Ireland’s high food prices in an  EU context suggests that Ann Fitzgerald has a point.