By Harry Keaney
Property prices could fall by as much as 30 to 50 percent if the amount of money being lent is not curbed, according to a former senior member of Ireland’s central bank, William Slattery.
In an article in Finance Magazine, Slattery wrote that the 26 percent growth in lending last year cannot be sustained.
Slattery warned that the property bubble will burst unless the government does everything in its power to stop house prices going up any further.
The warning comes as the EBS, the country’s largest building society, said the huge personal debt associated with house buying will be damaging to individuals and the economy. The head of lending at EBS, Maurice Walsh, warned that house buyers were being allowed to borrow too much money, something which is leading to excessive wage demands.
The EBS’s chief executive, Pat O’Reilly, also said that the society was concerned about the level of indebtedness within the economy.
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O’Reilly called on the government to address the problem and to ensure the planning process was moving at sufficient pace to ensure housing projects would be completed on schedule.
"Houses have become a speculative asset and that’s a very dangerous situation," he warned. He added that house prices were being driven by excessive speculative demand. "This cannot last and is likely to cause severe damage to individual borrowers and the economy over the next few years."
O’Reilly said the "feel good factor" being enjoyed by homeowners at the moment was stifling meaningful debate on the problems visible in the housing market. "When you make these statements you are almost accused of spoiling the party," he said. "All homeowners are enjoying the wonderful feeling of owning an appreciating asset. But the reality is that young people are being completely excluded from the market."
A new £100 million natural gas pipeline between Belfast and Dublin will be an extension of an existing gas link between Scotland and Belfast and should be completed by the end of 2002. Premier Transco Ltd., which has proposed the project, said that the 106-mile cross-border gas link represents the best solution to satisfying future energy needs in the whole island of Ireland.
Aer Lingus for take-off?
The Irish government is next week expected to appoint corporate advisers for the flotation of airline Aer Lingus, according to news reports. An employee share option plan has also to be negotiated. Staff in Eircom, which was floated last year, hold 14.9 percent stake in the telecommunications company.
O’hUiginn in Philly
"Fifteen years ago, if you asked me to compare Ireland’s economy to an animal, it most assuredly would not be a tiger, but perhaps a sloth, or some other slow, unattractive animal," Ireland’s ambassador to the U.S., Sean O’hUiginn, said last Wednesday in Philadelphia.
The ambassador was addressing members and guests of the Ireland Chamber of Commerce in the USA at a lunch reception in the Union League.
Meanwhile, the Mid-Atlantic chapter of ICCUSA will host Brian Murphy, vice president of sales and marketing for Aer Lingus, on Feb. 24, also in the Union League, at 140 S. Broad Street. He will speak about recent alliances Aer Lingus has made with other carriers and their initiatives to support business travel.
The cost is $25 for members and their guests, and $40 for non-members. Corporate tables are available. Details, call Rory Wilson at (215) 574-3100 or e-mail email@example.com.
Fleeing to the sun
The Irish Tourist Board is having plenty of success in attracting people from overseas, particularly the U.S., to visit Ireland. But there is another market — at home — that’s a problem. It turns out that Irish people themselves, flush from the Celtic Tiger economy, do not wish to remain in Ireland for vacation, preferring instead to flee to sun drenched destinations.
Official statistics indicate that spending by Irish people traveling abroad grew by 57 percent from £1.27 billion to £2 billion between 1994 and 1998. About half of that was spent purely on tourism travel.
In 1998, 1.474 million Irish people went abroad on a tourism trip rather than stay in an Irish destination. As might be expected, fears of bad weather were among the reasons Irish people decided to go abroad on vacation. Or perhaps it might be more accurate to say those people were fed up with the bad weather.
Church or family?
The Celtic Tiger is preventing more people from going to church, according to Dr. Walton Empey, the Church of Ireland archbishop of Dublin. He said that more couples now find they both have to work long hours to meet their financial commitments, such as house mortgages, and are using Sunday to spend time as a family at home.
However, he acknowledge that there were also other complex factors which influence church attendance. "Maybe some people are not finding what they need in the liturgy of the church," he added.