Importance of housing market for key economic decisions highlighted

There is a huge direct bearing between house prices and Ireland’s real economy compared with other countries, a report by the Economic and Social Research Institute says.

And, there has been a drive towards deleveraging since the housing market collapsed in 2008. Most of this deleveraging has taken place among more affluent households. Consequently, when the economy starts to recover and wage levels rise, this will put a drag on consumer spending authors Kieran McQuinn and Yvonne McCarthy found.

“Across countries, empirical estimates testify to the importance of the housing market to wider economic activity; however, this relationship is likely to be particularly strong in an Irish context.