Comparing the 2008 Financial Crisis to Recent Interest Rate Hikes in Ireland

In this blog, we look at insightful parallels between the infamous 2008 financial crisis and the recent interest rate hikes in Ireland. While each event has its unique characteristics, examining their similarities can provide valuable lessons for navigating the current financial landscape. We’ll explore the key resemblances between these two periods, highlighting real-life examples to deepen our understanding. So, let’s dive in and uncover the lessons history has to offer.

 

The Domino Effect: Fragile Housing Markets

Both the 2008 financial crisis and recent interest rate hikes have exposed the vulnerability of housing markets. In 2008, a burst in the housing bubble triggered a wave of foreclosures and plummeting property values. Similarly, interest rate hikes can impact affordability, leading to a potential slowdown in demand and a correction in housing prices. These dynamics remind us of the importance of balanced and sustainable growth in the housing sector.

Financial Strain: Increasing Debt Burden

During the 2008 crisis, many homeowners found themselves burdened with high levels of debt. Adjustable-rate mortgages with low …

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What are the Factors Influencing Housing Demand in Ireland?

Ireland has had a vast history when it comes to development and economic boom. In the late 1990s and the 2000s, the country’s housing demand rose as many sectors, including the government, showed interest in construction and housing projects, such as bank credit, salary solid growth, and rapid house prices. However, the economic recession of 2008 saw a significant collapse in house demand and supply that lead to a restriction on mortgage loans and pricing rates. In recent years, the price has improved, and demand has also increased but at a slower pace as compared to the late 20th-century growth chart. The following are some of the factors that have influenced the demand and supply of housing and mortgage in Ireland: –

Incomes and Employment. The income distribution has a significant impact on housing demand. The housing affordability problems for some in income distribution would be compounded if there was an unfair distribution of income and unemployment. Population growth. As the number of inhabitants increases in Ireland, the demand for housing also increases as many look for shelters to …

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The Dos and Don’ts for Mortgage Acquisition in Ireland

Many expatriates relocate to Ireland for employment, education, or retirement, with many more opting for a vacation residence in the country. Whether you choose to live in Dublin or a beach town, Ireland has a fantastic home for you. If you’re thinking of purchasing a home to live in, an investment property, or a holiday home in Ireland, you’ll need to know not just what types of mortgages available and how to get one established, but also what not to do. Even as buyer from within Ireland, getting approval for an Irish mortgage has been difficult in recent years. The amount of mortgage financing in Ireland is increasing, which implies that acquiring a house loan is becoming simpler. Banks, on the other hand, are still cautious about lending money, and so you can expect to be asked for a variety of papers to verify that any mortgage loan you take out is manageable to you.

You should be able to determine whether you want acquire a fixed rate or a variable rate loan when selecting a mortgage plan. This is a crucial decision because …

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What will the Local Property Tax changes mean for you?

On 2 June 2021, Finance Minister Paschal Donohoe confirmed the details of the Local Property Tax (LPT) changes. Once the changes go into effect on 1 November, the government estimates that just over a third (36 percent) of property owners will see an increase on their bill, just over half (53 percent) will see no change at all, and 11 percent will see their tax payments reduced.

First off, what is the Local Property Tax? The Local Property Tax was introduced in 2013, and it is an annual charge on all residential properties in the State. Basically, if you own a residential property, you will have to pay this tax. The charges are currently based on self-assessed valuations carried out in 2013. The amount you pay is based on the valuation of your property, and there are 20 different LPT bands, with the lowest two having fixed rate charges of €90 and €225. The problem with these valuations is that property prices have surged since 2013, while the valuations of property for LPT purposes have not changed since 1 May 2013. …

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Has Covid-19 Permanently Changed the Work Landscape?

The government says so. In a time where so many people in Ireland and across the globe have switched to remote working due to the global COVID-19 pandemic, employers and employees alike have been forced to adapt. With more than a year of remote working under their belts, people have been able to observe the many benefits and drawbacks that come with remote working.

 

Now, the Government’s National Remote Work Strategy aims to encourage remote working after the pandemic. The government says its main objective is to “ensure remote work is a permanent feature in the Irish workplace” in the future.  In this strategy, the government breaks down what it believes to be the benefits and challenges that come with working remotely during a pandemic. There are several benefits, including improving work/life balance, more time spent with children and family, and reducing the amount of time spent commuting. However, there are several challenges, particularly when it comes to mental health of employees. In a virtual workspace,  employees  often experience feelings of isolation, loneliness, and stress. Another benefit is the …

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All island rail proposal for Ireland

On April 7, 2021, Ireland’s Transport Minister Eamon Ryan came forward with Northern Ireland’s Minister of Infrastructure, Nichola Mallon, to announce an upcoming review of a proposed “all-island rail network.” This review will entail looking into various ways can improve connectivity between major cities and support regional development; additionally, the feasibility of the use of high-speed rail will be considered. The aim of these improvements is to boost sustainability and bolster economic growth across the entire island. Rail freight is also hoped to see better results.

Successful implementation of this proposal could have other benefits as well, such as reducing emissions from automobiles and mitigating regional economic imbalances on the island. Further, the project could lead to the creation of new jobs, both during and after its duration.

The next step for ministers is to find experts to conduct the review.

Though this proposal came jointly from Ministers of both the Republic and Northern Ireland, of particular focus is the northwestern region of the island. It is thought that this area has generally fallen behind in railway connections compared to …

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Slowing of Building Development

The rate of development in Ireland’s construction sector has slowed to an all time low in June spanning across the last 8 months. Although the rate of expansion is declining, the construction sector remains at a solid growth rate.

The declining growth was caused by the weaker activity in the civil an commercial segments. This contrasts the housebuilding sector that according to the Ulster Bank Construction Purchasing Managers’ Index displays signs of constant and strong expansion.

The construction index amounted to 53.1 for the month of June, 2019. This number decreased from May amounting to 54.9. The index defines that any number above 50 indicates expansion in the construction sector. Any readings below 50 indicate contraction.

Simon Barry, Ulster Bank’s chief economist for the Republic of Ireland, claimed that although commercial activity is still expanding, the decline in pace of expansion in June reached the weakest expansion rate in six years. This trend of declining construction expansion rates denotes that the housing crisis is far from being solved. The amount of construction needed to meet demand falls far below current …

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US Silicon Valley Bank funds Irish Silicon Valley

Despite the uncertainty that surrounds the Irish economy, the business sector of Ireland has been expanding far beyond previous years capacity, with little promise of slowing down. A large part of this is due to the increased investment by both national and internationally based companies in their Irish based assets. 

Additionally, many companies have become increasingly interested in the business and technological advancements that are happening within the up and coming “silicon valley” of Ireland, located within the capital city of Dublin. The United States Silicon Valley Bank, a subsidiary of SVB Financial Group and one of the largest US high-tech commercial banks, has especially taken notice to these upcoming influential companies. 

As a bank that focuses on lending to technology and biotechnology companies, it has made its mission to provide funding to all sizes of business in multiple different forms whether that be venture capital, revenue based financing, private equity, etc. The bank has stayed true to their mission since its debut, providing more than 30,000 start up companies with the funding they need to succeed. 

The Silicon Valley …

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Office extensions in the docklands

The Dublin City Council has granted planning permissions to a business associated with billionaire Denis O’Brien for additional floors on an office building in the Docklands. In the beginning of 2019, Jepview Ltd had plans to replace the fourth floor penthouse inside the Malt House building. Jepview planned to build an additional four storeys to make a nine storey office building. However, the council determined that the plan may be excessive and Jepview reduced one of the planned floors.

The council revised plans earlier this year after the conservation officer revealed that effective development will consist of five floors of vertical extension over an existing 4 storey victorian warehouse building. The officer also stated that the proposed addition should be reduced by at least two storeys to ensure the glass extension remained appropriated.

The office deemed that getting rid of only one floor was sufficient. The vertical expansion grant of the Malt House building uses the city council planner. Specifically, the proposal”exhibits a distinctive contemporary design which will make a positive contribution to the subject site and Dublin’s urban fabric”. …

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Changing Population and Effects on the Housing Crisis

According to the Central Statistics Office, Ireland’s population is expected to grow from 4.78 million in 2019 to 5.9 million by 2046. The growth is occurring due to economic growth and recovery since the 2008 recession. The population of Ireland has increased by just over a million people since 1999. The rapid population growth suggest an even greater demand for housing in the future. The housing crisis will only continue to progress, because demand for homes and apartments will only continue to grow as the population increases.

An additional 1.12 million people will need to be housed by 2046 as population continues to grow. At least 12,500 homes need to be built each year until 2021. This is a massive task, considering that Ireland built just over 8,500 homes in 2012.

Demographic changes in population also present challenges in supplying more housing. Ireland’s population is aging. The 2016 National Census has confirmed that there has been a 19.1% increase in people aged over 65. By 2046, people over the age of 65 are expected to account for 1.4 million of …

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