Dan O’Brien on Irish House Prices
4 October, 2011
Firstly, Dan (or the sub-editor) gave the piece the title “How low can house prices go?” While the article was interesting in many respects, I don’t recall him answering that particular question. OK, so headlines are always making false promises which the actual article fails to deliver; not exactly Man Bites Dog. Also, if you read the article expecting to see Dan’s own view, you would have been disappointed.
In fairness he does say “If the 2011 rate of decline in residential property prices continues for another 12 months, prices will fall by about 15 per cent from their current level. Given the headwinds facing the market, that is more likely than not.” And he also notes that the Banks’ Stress Tests had a baseline assumption “that prices will fall by a further 20 per cent before the market hits bottom. In their worst-case scenario, the decline would be almost 30 per cent. That would bring the fall from the 2007 peak to 59 per cent.”
But it would have been nice to have the personal view of the Economics Editor of the Irish Times on the matter.
Secondly, and more surprisingly, Dan doesn’t seem too hot on the calculation of percentages. Two sentences in the article offer contrasting views on the extent of the rise in Irish house prices during the bubble phase:
Compare “In the decade from the index’s start date, in early 1997, Irish property prices quadrupled” with “Although the US did not look out of the ordinary in the property-price rises it experienced from 1997 to 2006 (130 per cent compared with Ireland’s 400 per cent), it has suffered the second-worst rich-world crash (after Ireland)…”
Surely Dan doesn’t think that if a number quadruples, it has risen by 400%? Surely he knows that it has only risen by 300%? Must be an error by the pesky sub-editor again.