# The Ship of State



## Duplex (5 May 2005)

The State of the Irish Ship of State

A few facts;

1. Irish House to Income ratios (The ratio of the average annual salary to the average home price) is in  the region  of 10:1.  From my research I believe this to be the highest ratio of any country in the world.

2. Ireland has the highest per capita new home development of any country in Europe by a considerable margin.  It may be the case that we have the highest housing development per head of population in the world.

3. The housing boom is responsible for the employment of approximately 20% of the working population. The Central Bank estimates that 12% of the workforce is employed directly in the construction industry.

4. Rents and yields continue to fall in the residential investment market, the DAFT rental index has recorded falls since 2002.  There are no records for average void periods.

5. The Irish are the largest per capita investors in foreign real estate in the world. Much of the capital for this investment is coming from mortgage equity release from Irish residential property.

6. The current supply of zoned residential land equates to a supply equivalent to 300,000 new housing units.  The recent relaxation of land use planning for local needs in rural areas may possibly swell the supply by 50,000.  In theory the supply of land for local needs is only limited by the number of qualifying individuals.  If you assume an average household size of 2.6 persons this would equate to a supply of residential land sufficient to house 910,000 people.

7. The Irish banking system has performed astoundingly over the past decade, shareholders expectations for continued stellar fiscal feats have possibly influenced the ethical behaviour of these institutions if regular news reports in the nations media are any indication.


Ireland’s ship of state has had favourable following winds, while other larger ships in the global fleet  are becalmed.  At the vanguard, the fleet’s leviathan the SS America has been steaming full ahead for some time, consuming coal at a fantastic rate and borrowing ever increasing amounts of fuel from ships that follow in her wake. However Chief Engineer Greenspan has warned Capitan GW Bush the master of this titanic vessel that the engines “can’na take it any longer!”  he has eased back on the regulator afraid that the boilers will explode at any moment, meanwhile on deck the  passengers and crew are consumed in a riotous party oblivious to the frantic machinations  on the bridge.  

In the distance the Irish Rover, a small old fashioned ketch can be seen surfing the bow wave of the giant America.  The Rover’s motley crew whoop and holler as the old sea dog rides the colossal wave like a dolphin.  The skipper a gnarly salt by the name of Ahern glances up at the main mast a new fangled alloy built rig called a M50, he has not got around to finishing the mast and is concerned at the way it bends under the load of the billowing mainsail.  His crew are not bothered they had long ago given up casting their nets, now they busy themselves in carving little houses out of whalebone supplied by the master of the lumbering SS Deutschland. The Rovers crew buy and sell these crude little sculptures amongst themselves, and at any opportunity buy the rudely hewn efforts of other crews.   Ahern looks aft, across the vast expanse he sees the top sails of the clipper Australia which seemed to have tacked into the doldrums, and in the near distance he spies the old tramp steamer Great Britain visibly slowing, steam venting through her stack .  Ahern returns to whittling a three bedroom duplex from a rib bone of a pilot whale.

With apologies to Melville.


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## nahdoic (5 May 2005)

10/10 for colourful imagery


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## Unregistered (5 May 2005)

...and 10/10 for research and presentation of facts and data


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## Unregistered (5 May 2005)

Excellent post Duplex !

Good opportunity for counter-arguments - if they even exist. 
Not much substance to them so far:

"Aha! you typed 10:1 when you should have typed 1:10"

"Ahaa! you said average when you meant to say median"


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## extopia (5 May 2005)

Unregistered said:
			
		

> ...and 10/10 for research and presentation of facts and data



Nought out of ten for numeracy, however. A ratio of 10:1 is NOT the same as a ratio of 1:10 (it's the inverse: the equal and opposite).


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## PMU (5 May 2005)

10/10 for imagery but 0 / 10 for meaningful facts.



You’ve been reading the Economist, haven’t you? The ratio of the average home price to average annual salary is meaningless.  There are always multi-million euro homes sold each week that skew the average price upwards. The only meaningful figure is the median price, i.e. the price you are most likely to pay if buying a house, which generally will be below the average. Also the ‘average wage’ figure is meaningless.  Few, if any, purchasers are on the average wage.  They earn more, are trading up, have income streams from other investments, are subsidised by parents, etc. The ratio to which you refer bears no relationship to what actually happens in the market.  A ratio of the median mortgage to the median income of purchasers i.e. are purchasers in general taking on more debt than they can reasonably expect to repay, or perhaps the ratio of total mortgage debt to total disposable income in society would be more meaningful.  Ireland may be building more homes than anywhere else but as afaik the ratio of total housing stock to population is lower in Ireland than elsewhere.  Your assumed average household of 2.6 is too high. Divorces, separations, immigration, population growth, increased longevity of widows/widowers and other factors will lower the average household size.   As for: ‘The Irish banking system has performed astoundingly over the past decade’.  Sure, by creating and selling debt – no great talent required for that – by complicity in tax fraud, and by selling high fee and poorly performing ‘investment’ products.


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