Ireland will smile again, given time
SO we partied. While the going was good we splashed out on houses, bought brand new cars, turned our nose up at Aldi and flocked to New York on shopping sprees.
And then came the turn, when it all came crashing down and people had to stop and think. Would next month’s pay be enough to cover that big mortgage and the Superquinn shopping bill. What about that two week break booked with the travel agent or would there be enough to eat out at the weekend.
Consumers were lured into the belief that getting on the property ladder meant that you had made it. Parents encouraged their kids to buy a house, developers went crazy working through the night to build housing estates and banks couldn’t get rid of money faster. “Don’t have a deposit? Not to worry. We can give you a 100% mortgage”.
Oh no, we say now. Suddenly, as young couples scrambled to get set up in their new home things started to turn sour. The neighbourhood has been transformed into a ghost estate, the house is worth less than the massive mortgage, their pay has been cut and taxes have gone up.
Ireland’s obsession with property is a major part of the reason the country has found itself in the position it is in today. Some people will say that it is the homeowner’s own fault for scrambling to get a mortgage in the first place; others will say it is the bank’s fault for giving them the money. Wherever the blame lies, there’s one thing for sure: our love affair with property is well and truly over. Never has a break-up been more bitter.
While the banks are on life-support it is estimated that around 70,000 people are struggling to repay their mortgages. Many of these homeowners are struggling with pay-cuts, job losses, tax increases and higher monthly bills. Life will never be the same again for homeowners, who once sat in their neatly decorated living rooms and smiled as their property increased in value by the day. They now ask when the end will come to the outflow of equity from the once valuable home.
A positive kickback to the downturn has been a renewed confidence among consumers. They may not have the confidence to spend their cash, but they certainly have the confidence to seek value. And there’s no shortage of that.
It seems odd now if a restaurant does not offer an early bird menu or a clothes shop does not have a sale section. Aldi and Lidl have shot to stardom quicker than an X-Factor finalist; their fruit and vegetables suddenly “the best around”.
Consumers are learning to do things for themselves. Travel agents have been one casualty of this, as holidaymakers realised they could get the same break for a much cheaper price on-line.
Hotels are almost at a stage where they are paying people to stay in them, while Ryanair is rubbing its hands with glee as travellers go in search of lower fares. Even Irish Rail are offering free fares on their Dublin to Galway route.
People have learnt to ask for things, which has led to rents coming down. Shopping around is no longer time consuming. If one insurance company is offering a certain price, it’s OK to ring two others and strike a deal. Pubs are even getting in on the act, offering free food and discounted drinks.
This is the Ireland of today. It is being said we were too greedy when the good times rolled and perhaps we were, but we have been forced to grow up.
We are working our way through this awful fog that has descended upon our little island, but no matter how hard things may seem, with some adjustment and by talking, we can come out the other end. Banks say they want to talk, consumers must get the best price they can. If this disaster has taught us anything, it has taught us that we must not be afraid. Money is now very valuable and we need to think carefully about how we spend it.
The lights may be very dim right now but they haven’t gone out just yet. Ireland still has a lot to offer but of course people are angry, of course they feel hurt and of course they are finding it hard to make ends meet. But the system we have in place in Ireland didn’t work, it failed and now it’s time to adjust, move on and, although days of constant partying are over, the country will smile again, but it will take time.
