The fall of the Tory party

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NickCJ in reply to @Hefty

Prices fell in Ireland (and Spain and lots of other places) because supply was higher than demand. They built more houses than there were buyers

I would tell you a different story which focuses on effective demand as the key driver, with supply as a sideshow. Very aggressive bank lending at high LTV and income multiples massively increased the spending power of the population (both owner occupied but crucially BTL). When the banks blew up, lending stopped, no-one could afford to pay the old prices and demand evaporated.

It's not a story of 1,000 households wanting to live in a particular town and the housing stock expanding from 900 to 1,100 dwellings to drive down prices.

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Hefty in reply to @NickCJ

But, I mean, that’s still demand.

In the 2008 crash impossible to separate the drop in demand and tightening of lending. The two were in the same death spiral feeding off one another.

But it very much was a story of fewer people wanting to live in an area than there were houses for sale.

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NickCJ in reply to @Hefty

But, I mean, that’s still demand

Yeah I agree, I just don't really think the supply side was particularly important back then. I think it probably is important in Dublin today, as the whole construction industry went into NAMA and nothing got built for 15 years, but that's another story...

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