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What's the effect (not mentioned here or on Colman's earlier post, but mentioned by a commenter on Henry Farrell's post at Crooked Timber) of the property boom?

Is it what FriedPotatoes' "Anglo-Irish" model boils down to? (Sorry for that fried and boiled, but having actually read FriedBollocks, my metaphors are screwed for the week).

A shared bubble?

by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jul 5th, 2005 at 07:27:56 AM EST
Well, I'd argue that a good portion of the property boom here is demand driven. 60,000 or so people left school every year between (very roughly) 1985 and 1995. They all want houses, and they now have the money to buy them. Houses aren't being built fast enough and old people aren't dying fast enough, so the price rises rapidly.

Prices will level out, and maybe drop a bit, when supply catches up with demand.

by Colman (colman at eurotrib.com) on Tue Jul 5th, 2005 at 07:38:06 AM EST
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OK, but what effect does the property boom have on the overall economy?
by afew (afew(a in a circle)eurotrib_dot_com) on Tue Jul 5th, 2005 at 07:50:41 AM EST
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Contributes lots of economic activity: building, selling, lending, furnishing etc.

There is some leveraging of equity, but I don't get the impression that its reaching very dangerous levels. Personal indebtedness is rather lower here than in the UK or US as far as I recall.

by Colman (colman at eurotrib.com) on Tue Jul 5th, 2005 at 08:07:35 AM EST
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I think this is an interesting question, because if you remember, about 5 years ago everybody was talking about the "Dutch Miracle" and its challenge to the moribund economies of France and Germany.

Like the Irish story, the Dutch story was partly a combination of market-friendly reforms (of the labor market mostly) and social partnership to moderate wage demands.

But the Dutch boom, as Jerome has indicated elsewhere, was also driven by a property bubble, which has now burst, leading to an economic downturn, and people don't talk about the "Dutch miracle" so much anymore.

I wonder if something similar may be happening in Ireland. As the table indicates, its property market has been pretty frothy over the last decade or so:

by TGeraghty on Tue Jul 5th, 2005 at 02:20:09 PM EST
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