Ireland’s Fraudulent Wealth on Show As Property Market Booms

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“Ireland is really a third-world country,” said a colleague yesterday.

We wondered how that could be. It’s cold and rainy. The third world is supposed to have good weather and bad beer. Ireland has just the opposite.

Even stranger is the fact that Ireland is richer than almost any country in Europe – on paper. Housing prices have gone up so much, even the average homeowner has gotten rich.

And yet, there is something dismal and fraudulent in the whole thing.

The typical Irish house may be worth a fortune, but it is still far from civilised habitation…even the new places. An advertisement in the Dublin train station offers new townhouses on the outskirts of the city, starting at about US$400,000. Yet, they are small and unattractive, the kind of place you would expect to find outside Little Rock for US$120,000 – only not as nice. It takes more than a single generation to achieve real wealth and much of Ireland’s instant wealth is a sham.

Still, there’s no doubt that the place is booming. It is moving up and moving up fast. Houses, office buildings, even little factories are going up. Down at the docks in Dublin, they’re putting up a whole new city of offices and apartments. Traffic is heavy; people are working. And everyone seems to want to buy property. Now, practically on every street corner is an office offering to sell Irishmen property overseas – in Croatia, in Spain, in France. Today, Irishmen no longer leave the Emerald Isle as poor refugees. They leave as retirees…and vacationers.

Bill Bonner
The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
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Comments

  1. Bill, I like some of what you’ve written about real wealth vs. simple monetary gain, but I think you’re a little hard on Ireland here.

    “Houses, office buildings, even little factories” ARE real wealth and most definitely not a sham, regardless of your opinion of the architectural design.

    Markus Hallm
    June 29, 2007
    Reply
  2. @Markus: What country do you live in?…the ‘wealth’ is there but it’s taking normal people a lifetime to buy a non-decent shoebox and keep repeating the mantra: “it’s a great investment”…while their lives are being ruined by being nutered financially and the next holiday looks like it’s going to be on credit as well..sure Ireland’s doing better than years ago..but when will we all go back to living life again instead of becoming millionaires? [rant over]

    Reply
  3. A very unfair comment.

    You simply cannot compare a property in Ireland’s booming capital city with a city in America’s rapidly declining Mid-West.

    The market will ultimately judge Ireland on the property market and right now, the smart money is on a soft-landing.

    Barry Sullivan
    July 3, 2007
    Reply
  4. I think Bill has hit the nail on the head here. It’s a lot easier to see the sham that it really is looking from the outside in. All the local banks have managed to sell off their propety portfolios last year so it looks like the path has been all set for the deflation to begin. I think you’ll find that the smart money got out of Irish property quite a while ago.

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  5. Isn’t Ireland simply no different to other Western European countries when they go through a property boom ?

    From a relatively large house in sunny Sydney the whole of Western Europe looks fraudulant. :o)

    Surely a lot of the boom in Ireland has initially come from a strong currency, full employment, increased economic activity through migration and the inflow of money through a dynamic export sector ?

    Perhaps it has got ahead of itself, as it always does but the aforementioned economic improvements will still be there if Irish property prices decline.

    Not to mention that Croatian holiday home :o)

    Sean Healy
    July 3, 2007
    Reply
  6. Fair and true comment IMHO as someone living in Ireland on the average industrial wage who would need to borrow 10-12 times my wages to buy an overpriced, paper-thin-walled shoebox. Thank god there’s some sense coming into the property market now, buyers are wising up and not jumping en masse “on the ladder”.

    Reply

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