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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 Source: 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 Source: 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 Source: 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 Source: 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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