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Here's the impact of Ireland’s economic crisis on housing in graph form

Planning permissions peaked in 2004 with 101,653 permissions for construction of both new houses and apartments.

IRELAND’S ECONOMIC CRISIS started in 2008 following rapid growth during the Celtic Tiger years. 

Affected by the global financial crash in 2007-2008, the country fell into recession which lead to an increase in unemployment and emigration and did not ease for several years. 

The Central Statistics Office (CSO) has now assembled indicators which have been repeatedly requested prior to Ireland’s economic crises, during the recovery and in the years following the country’s recovery.

These indicators cover a range of subjects and show that imports of sparkling wine peaked in 2008 at €28.9 million but halved following the economic crash to €14.5 million. 

In 2009, the number of vehicles licensed fell to almost half that of the 2008 level while emigration peaked in 2012 with 83,000 people leaving the country. 

We decided to take a closer look at how Ireland’s economic crisis affected the housing market so, first up, here’s a look at the change in the annual House Price Index between 2006 and 2017:

HPI CSO CSO

As seen in the graph above, house prices increased by 14.9% and 7.5% in 2006 and 2007 respectively.

House prices fell each year from 2008 to 2012, with the largest decline of 19.2% seen in 2009.

That trend reversed in 2013, however, with a small increase of 1.2% in the house price index.

House prices have seen large year-on-year increases since then, with increases of over 7.5% in each year.

Let’s take a look now at Private Sector debt and Outstanding Mortgage Debt between 2003 and 2017:

OMD CSO CSO

As seen above, mortgage debt was 27% of total private sector debt in 2003. 

That increased up to the year 2007 with both mortgage debt and private sector debt expanding but mortgage debt expanding at a higher rate.

In 2017, the mortgage debt accounted for 10% of total private sector debt, compared to 32.7% in 2005. 

Since 2003, the underlying mortgage debt has increased by €19bn while the total private sector debt has increased by €511bn.

A large proportion of Ireland’s private sector debt relates to the financing of resident, foreign-owned manufacturing and service companies.

Time to take a look Private Sector Flow and Mortgage Transaction Flow 2003-2017:

MTF CSO CSO

The flow of both total private sector credit and mortgage credit increased every year between 2003 and 2006.

Yet from 2007 onwards there’s a downward seen in both series.

The net flow of mortgage credit became negative in 2010 and remained so until 2015.

According to the CSO, that indicates repayments by the private sector. Since 2016, it became positive but has remained at a low-level.

The relatively large positive flows of credit in the period 2004-2008 largely related to investment in residential and commercial property.

The positive value of 28% in 2011 was mainly caused by refinancing operations for large multinational groups. 

Since 2016, large negative credit flows have been seen, mainly as a result of the net repayment of non-financial corporate debt related to the funding of intellectual property.

Finally, there are granted planning permissions between 2003 and 2017. These peaked in 2004 with 101,653 permissions for construction of both new houses and apartments granted that year.

PPs CSO CSO

Since 2004, the total number of planning permissions has decreased with gradual decline seen until 2009 and a significant decrease in 2009 and 2010.

However, the level of permissions granted gradually started to increase from 2013 onwards as the crisis lessened. 

Data for completed new dwellings is only available from 2011 onwards, the CSO has said. 

After falling in 2012 and 2013, the number of new dwellings has increased from 2014 onwards.

In 2017, the number of new dwellings completed stood at 14,435, a significant increase from 2011 levels of 6,994 completed dwellings.

In 2018, the effects of austerity and of the economic downturn are still evident in today’s housing market. 

These CSO graphs allow to zoom out, take stock and look back at the recession and how it affected housing in Ireland during those years.  

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    Mute Kieran OKeeffe
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    Dec 7th 2018, 12:37 AM

    In my early fifties,,still paying a relatively small mortgage..but god help the people trying to buy and get a start.maybe they will be the first generation to have poorer life’s than their parents..100 yrs of political ineptitude and our kids pay the bills

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    Mute prop joe
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    Dec 7th 2018, 7:22 AM

    @Kieran OKeeffe: expensive property is just a tax on the young. It’s incredible how much money and government energy has bern thrown at the banking issue. Every decision has favoured the banks/builders over the consumer.

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    Mute Patrick O Connell
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    Dec 7th 2018, 10:15 AM

    @Kieran OKeeffe: what about the generation who bought houses during the Celtic tiger at peak prices and quickly were left in negative equity. Thankfully prices are rising all the time again. This is mostly due to the housing crisis. Either way one generation is going to get screwed.

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    Mute Connor Saváge
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    Dec 7th 2018, 4:19 AM

    I was pushed away from Ireland in 2012 by the lack of solid employment, now I’m forced to remain in the same circumstance because of the crippling cost to live there. The level of taxation across all levels is obscene compared to what the country actually provides those who pay it.

    So frustrating to know that the circumstances are unlikely to change anytime soon.

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    Mute conriel
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    Dec 7th 2018, 4:58 AM

    @Connor Saváge: I fully agree, this country is far too expensive to live in, but certain people do very well.

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    Mute Dav Nagle
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    Dec 7th 2018, 6:55 AM

    @Connor Saváge: Agreed, hospitals are like something in the third world, guards are underpaid and under resourced, nurses too and teachers not guaranteed work, everything to including houses are overpriced, what I am paying tax’s for I just don’t see and who can argue my point?

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    Mute Martin Sinnott
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    Dec 7th 2018, 7:01 AM

    @Dav Nagle: our politicians are some of the best paid in the world !

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    Mute John McSweeney
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    Dec 7th 2018, 7:23 AM

    @Connor Saváge: I’m in a similar situation and live in the UK. The idea of a coming home and being taxed in the high band after €36k is crazy to me. That’s not even the effective rate I believe. Also no NHS for my taxes or other services for my tax and don’t even get me started on the public transport system. Ireland loves to talk itself up as being a great little country but really it’s just an overpriced overtaxed nation. From April 2019 the high band for income tax in the UK goes to £50k sterling. I hear Varadkar mentioned something about doing that for Ireland over the next 5 years – I’ll believe it when I see it.

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    Mute John Horan
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    Dec 7th 2018, 10:02 AM

    @Martin Sinnott: Look at Singapore…they get paid a lot lot more. Then look at what you get for your money. A fantastically run country when you pay top dollar and attract the best people.

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    Mute John Horan
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    Dec 7th 2018, 10:03 AM

    @Dav Nagle: You are paying your taxes to facilitate the social welfare class. Not forgetting the criminal class also.

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    Mute Niall O'Neill
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    Dec 7th 2018, 1:33 PM

    @John McSweeney: You won’t pay council tax here , it’s swings and roundaboouts

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    Mute Paddy Kavanagh
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    Dec 7th 2018, 12:28 AM

    you can come up with statistics to prove anything!
    40% of all people know that!

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    Mute Diarmuid Hunt
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    Dec 7th 2018, 6:16 AM

    @Paddy Kavanagh: You can verify statistics by checking the data sets. Please provide a data set for your assertion.

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    Mute Brendan
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    Dec 7th 2018, 6:59 AM

    @Paddy Kavanagh: if your quoting the Simpsons, Quote it right

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    Mute mrbryanrussell
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    Dec 7th 2018, 12:48 AM

    Heart goes out to those trying or getting mega sized mortgages these days. No doubt a big portion in 10-20 years time will just stop paying them like a lot are doing these days.

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    Mute Mark Johnson
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    Dec 7th 2018, 5:53 AM

    More like less than 5 years..

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    Mute Sean Conway
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    Dec 7th 2018, 9:16 AM

    @mrbryanrussell: FG/FF fixed the banks. but there’s no need to fix housing because they can make plenty of money out of it the way things are for their cronies.

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    Mute Daniel Nolan
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    Dec 7th 2018, 6:24 AM

    The construction cost and material costs to build a home is about 4.5 times the single average income, believe it or not, this hasn’t changed over last 30 years. I checked this myself but info is on cso.

    In fact new homes should be more affordable than ever from what i could see. Which should be driving down second hand house costs.

    Supply is the issue.

    Supply can only be on zoned lands. Some zoned land owners are in negative equity as the land was bought during boom and are waiting for prices to go up.

    Solution has to be to free up those lands.

    Solution cannot be to just lend more money to purchasers than the recommended 3.5 times salaries as what really happens there is the purchaser buys the negative equity and the can is kicked down the road until the next downturn.

    Government should be tackling the zoned lands issues a lot stronger. Supply will increase and prices will be more affordable across the board for young couples.

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    Mute John McSweeney
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    Dec 7th 2018, 7:32 AM

    @Daniel Nolan: everyone knows the problem
    but nobody likes that solution as it’s politically unpalatable to start rezoning peoples land. A big part of the issue here is Ireland’s size. We are still a very small nation and people therefore often have very direct access to a local TD and will have no problem banging on their door in the dead of night to give out about a rezoning decision. Rezone the wrong person and they can create a lot of problems for a TD around election time.

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    Mute Daniel Nolan
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    Dec 7th 2018, 7:56 AM

    @John McSweeney: I wouldnt see that other lands need be rezoned at all. And yes that’d be messy.

    Land is zoned strategically by our councils so by extension by me and you. Housing zoned lands are zoned as that is where it’s likely best put houses based on a number of reasons mainly location to town core and infrastructure, population growth etc

    When the land was zoned for housing, this immediate created wealth for the owner. The farm land after it was zoned increased in value between 10 and 100 times over during boom. And was bought by developers. This left huge room for massive profits on housing as people could borrow whatever they wanted.

    Should the purchaser i.e. developer not build on a site with infrastructure available, which really would only be because they paid too much for the land, then the land must be turned over to another builder who can deliver.

    A suitable aggressive results based tax on zoned housing lands is all that’s required. And i would consider this fair, as the land value is only elevated as we the people who need the houses zoned it to create the value.

    People should not have to wait when supply is low and demand is high if the infrastructure is there and ready to go. Otherwise it makes a mockery of zoning lands in the first place.

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    Mute Dave Doyle
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    Dec 7th 2018, 7:10 AM

    Boom and bust, and the rich get richer. It is deliberate policy. FFG have bought into neoliberal capitalism and what the graphs show is the results.
    Corporate Welfare is the big problem. It’s robbing the country blind. Legal loopholes built into legislation so banks, Vulture funds, big landlords, developers, corporate interests can thrive. Ordinary people pay the price. The wealth divide and social deprivation should have seen a revolt in the country.

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    Mute Ciaran Whyte
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    Dec 7th 2018, 8:09 AM

    @Dave Doyle: I’m shocked that it actually took so many comments before neoliberalism capitalism was mentioned

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    Mute Dave Doyle
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    Dec 7th 2018, 8:49 AM

    @Ciaran Whyte: You cannot escape facts.

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    Mute Dominic Leleu
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    Dec 7th 2018, 7:28 AM

    Time for yellow vests in Ireland.
    Bad weather is coming up

    45
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    Mute Darren Norris
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    Dec 7th 2018, 9:01 AM

    @Dominic Leleu: Copy the rioting in France for what reason? To lower house prices?

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    Mute Dominic Leleu
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    Dec 7th 2018, 10:06 AM

    @Darren Norris: you know only about the riots where sc@m is ruling.. I speak of the yellow vest movement. not the same. Who ask you to riot ?

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    Mute Hubert Sz
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    Dec 7th 2018, 2:53 PM

    @Darren Norris: to rezone the land and let people build houses.

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    Mute goon4life
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    Dec 7th 2018, 7:40 AM

    Time for a yellow vest movement in Ireland

    37
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    Mute Gockdaw
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    Dec 7th 2018, 8:51 AM

    @goon4life: More than that… We need a few heads on pikes. Bertie first, Lowry, Callely… It would be a long list.

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    Mute Sean Conway
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    Dec 7th 2018, 8:03 AM

    Noe liberalism has destroyed having a home. a basic need has been turned into market commodity to be sold to the highest bidder.

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    Mute Neville Bartos
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    Dec 7th 2018, 1:13 PM

    There is currently a three bed duplex for sale at Adamstown, Lucan for €275K. Modem with three bathrooms a little outdoor area at back and own parking out front. 8 minutes walk to Adamstown train station and a train journey is 35 minutes into Pearse Station. Is that really that outrageous? You won’t get that in many other western cities around the world.

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    Mute Bart Teeling
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    Dec 7th 2018, 6:58 AM

    I hope the so-called professional historians there will apologize personally to her.. after all their condescension of her research.

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    Mute Bart Teeling
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    Dec 7th 2018, 6:59 AM

    @Bart Teeling: meant for corless story..

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