Fresh from covering itself in poop last week when it took the “unprecedented” step of removing from its website, a working paper which showed that a significant number of Irish households would be better off on benefits, Frances Ruane’s government-funded ESRI this morning published its quarterly economic forecast. Often an outlier when it comes to projections, this mornings publication is very much in line with recent government forecasts with GDP forecast at (with last February’s forecast in brackets) 0.6% in 2012 (0.9%) and 2.2% in 2013 (2.3%) and GNP forecast at 0% for 2012 (0.1%) and 0.5% for 2013 (1.0%). Of course, none of us has a crystal ball but it is difficult to see, with ongoing difficulty in the UK, the rest of Europe and the US, how we will have GDP growth this year, and I would not be surprised if the Central Bank of Ireland quarterly outlook report due in July 2012 reflected that.
On Friday last, we had a bit of a laugh at Mark Fitzgerald of Sherry Fitzgerald’s musings on the recent Moody’s assessment of Irish property. Who knows if the Fitzgeralds enjoy a Sunday dinner together, but today, Mark’s brother John Fitzgerald and another ESRI researcher, David Duffy published a special report on the Irish housing market, in particular supply and demand, which makes the simple points that the over-construction in the last decade was more pronounced in some areas than others, and that in Dublin today, although the vacancy level is still above that in 2002, there is closer matching between supply and demand.
There is little reference to the availability of credit or construction costs or indeed very little on emigration, which almost criminally for a country historically scourged by emigration, is not routinely accurately monitored by either the CSO or the ESRI. However the conclusion is that we will need about 20,000 dwellings per annum to cope with household formation until 2015 even after “assuming significant emigration”, though there is little information given on what assumptions were made. Somewhere in Sussex, an hirsute Dutchman is choking on his chips with mayonnaise!
Somehow – and perhaps this is hypersensitivity – I get the impression the report wants to suggest an imminent flattening and rebound in prices. Its conclusion that the large numbers who have started renting since the 2006 Census may switch to buying seems to ignore what might perhaps be a just-as-likely possibility of renting numbers growing as existing households escape from under-water mortgages and contemplate an economy where it is expected we will still have 12%-plus unemployment in 2015. And the wording used in the conclusion – “when expectations change it is likely that the recent sharp fall in house prices will be halted” – is odd, given the recent two-month-running increase in prices in Dublin, does the ESRI that expectations have now changed because the “recent sharp fall” has “halted”, at least for two months running? Would have been great to be a fly on the wall during the dessert course at the Fitzgeraldses yesterday.
And lastly, for all the flak that was directed, by the ESRI and others, at the trio who produced the working paper “the cost of working” which was removed by the ESRI last week, today’s publication tells us that in 2001 Ireland had “total dwellings per thousand adult population” of 467 and “occupied dwellings per thousand adult population” of 467 also. Elsewhere the report says that there was an Irish vacancy rate of 9.8% in 2002 which seems reasonable. Never mind “peer review” just a common-sense second pair of eyes might have picked up on that clanger.