Two charts showing why Ireland can expect more robust correction in the property prices post-crisis trough:
First, investment in new construction:
The above shows that Irish construction investment dropped more significantly than in the case of (relatively comparable) Spain. This implies that we have been facing longer and deeper reductions in new stock additions than Spain, implying greater pressures on new supply.
Second, House Price to Income ratios (ignore caption):
Irish property prices have fallen more relative to income than Spanish prices. Which implies that penned up demand is greater in Ireland.
So there you have it, two (not all, of course) fundamentals driving prices recovery up in Ireland and both have little to do with the potential bubble dynamics.
Note: above charts are from IMF's Article IV Consultation Paper for Spain.
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