Inside the world of business
Bubble, bubble, toil and trouble for property
THE RELEASE of the monthly house price figures used to prompt a round of that smug Celtic Tiger parlour game known as “how much is my house worth”.
Just like that game, the monthly PermanentTSB/ ESRI house price index is a thing of the past. Instead of its commentary, the market relies on the much drier data in the Central Statistics Office’s Residential Property Price Index.
Much was made of the fact that yesterday’s release showed that the index for Dublin increased on a monthly basis for the first time since April 2008 – but economists were swift to dismiss that significance.
KBC opined that factor such as the better employment prospects in the capital, the relatively tight supply of three-bed semi-detached houses and the fact that at 47.4 per cent off the peak prices have fallen further than in the rest of the country, may be at play. The Dutch lender concluded however that the May figures probably owe “more to statistical quirks than a turnaround”.
The CSO itself points out that the Dublin increase is statistically insignificant and that the six-month moving average decrease is still higher than the 12-month average. That’s statistician speak for we don’t expect any serious upward trend any time soon.
The Professional Insurance Brokers Association laid the blame for the continuing falls on “the absence of a normal banking system” and pointed out that lenders were still rejecting up to 80 per cent of mortgage applications.
Any prognosis that the latest data signals the beginning of the end of falling property prices is wildly over-optimistic. Just last year Klaus Regling said the Irish banking crisis was the result of a “plain vanilla property bubble”.
Such a bubble is clearly going to take a long time to work its way out of the system.
Lawyers know the best table in town
SOME OF the key players in Ireland’s much-vaunted export industry gathered yesterday in the Four Seasons Hotel in Dublin for the annual president’s lunch of the Irish Exporters Association.
The publication of figures earlier this week, which showed that exports fell back slightly in April, did little to dampen spirits.
Mark Fitzgerald, president of the association, presented some now-familiar headline statistics on Ireland’s export industry. Exports in the first quarter were up 9.4 per cent, with the pharmaceutical, agri-food and the services sector – particularly the IT sector – driving growth.
Whatever the argument about the real impact of export activity on the domestic economy, particularly in terms of jobs, the fact that a small island economy, with few natural resources and depleted domestic consumer demand, is exporting what the world wants and needs is one of Ireland’s strongest attributes.
Fitzgerald also highlighted another important point. While Ireland’s exports stood at €162 billion in 2010, Portugal’s exports were €49.2 billion for the same period, while Greece exported €42.3 billion of goods and services. This is a salient point, he said, one that should be highlighted during the current extremely fragile economic crisis.
Of more than passing interest was the profile of the attendees at yesterday’s lunch. Peppered around the room were tables of lawyers, accountants and corporate financiers – always a sign of activity in the corporate world.
Ireland’s flourishing export industry has spawned its own micro-industry, as Irish companies and international firms operating here find they have increasing need for legal, tax and regulatory advice about operating in international markets.
Having once derived a large chunk of their income from the now-defunct construction industry, it seems that many of Ireland’s top firms are making sure they’re at the table when the next contracts are being signed.
Today
Further light will be shed on the state of the public finances with the publication of the quarterly national accounts for the first three months of 2011.
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