How the today’s housing crisis compares to the crash of 2008 [Video]

Natasha Browne, senior research analyst at Savills Ireland, compares and contrasts the housing crash of 2008 with the housing crisis the country is facing today

Today’s global economy is markedly different from the pre-Global Financial Crisis (GFC) era.

Prior to 2008, economies on both sides of the Atlantic were awash with cheap debt.

In Ireland, the dash for cash led to a surge in demand for property, with national house price inflation hitting 17% during 2006 — a year when 93,000 homes were completed (almost triple what was built last year).

Excessive borrowing, alongside a hands-off regulatory system, led to the banking crash in 2008. Ireland’s housing market has been in recovery mode ever since.

One of the big structural changes between the pre-GFC era and now concerns lending.

Developers in the current climate are being deprived of sufficient funding to build.

Even if a bank will lend up to two-thirds of the loan-to-development amount, the builder …