Dublin's cost of living rising

Relative to other world cities, Dublin continues to be one of the world's most expensive cities to live in.

The latest edition of the Mercer Cost of Living Index reveals that Dublin is now the world's 16th most expensive place to live, marginally behind New York.

Think about that for a sec. You're paying New York prices for Dublin living standards. Sad but true.

This is two places higher than Dublin was last year, indicating that the cost of living relative to other cities is still rising in Dublin, despite cooling house prices. Conclusion: rip-off Ireland is still alive and well and scorching the wallets of everyone in the Pale.

Moscow tops the list of the most expensive cities in the world to live - not a surprise to anyone who's tried to get accommodation there or even buy a sludgy coffee near the Arbat.

London is second, no surprise there either, and the Asian cities of Seoul, Tokyo and Hong Kong make up the rest of the top five.

In case anyone's wondering how Moscow could be the world's most expensive city, here's Mercer's rationale:

"Mercer's annual Cost of Living Survey covers 143 cities across six continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees."

Living in denial - The property bubble

Living in denial seems to be one of the most common pastimes these days.

In fact, it's probably the third most common pastime in Ireland today, behind slumping in front of the telly to watch CSI: Miami and slurping wine with friends while comparing the notional values of their overseas property portfolios.

I thought it might be useful to run through a few known facts that people are living in denial of in Ireland today, just as a reminder and in the vain hope that some people might snap out of their torpor and face up to some of the scary realities that await us all.
Today, we'll kick off with a biggie - the Irish property market.

Irish property prices are about to collapse, because it is the biggest bubble in the global property market bubble. Yes, people have been predicting this for years, and with good reason. It is inevitable. No, it hasn't happened so far, but that just means the crash will be more severe when it occurs, which is very, very soon.

That one bed apartment you bought within a mere hour's commuting distance of Dublin city centre (if you leave for work at 4am) will not continue to inexorably rise from the half million euros you bought it for.

The reason for this is because it is simply not worth anything like that amount in real terms.

Let's look at the fundamentals of this market. Historically, the average family house anywhere was thought to be worth approximately three times the average industrial wage. In Ireland, accommodation now is a factor of around 12 times the average industrial wage.

Also, the US property market has just tanked, and Ireland's exposure to America makes us particularly vulnerable to economic developments there.

Finally, didn't you notice that the only people talking up house prices are those with vested interests in selling them? Auctioneers (recently demonstrated on Prime Time to be utter cowboys), Estate Agents (who increasingly and quietly have been selling their own houses and renting), and newspapers (whose lucrative property sections which shrilly trumpet new developments are dependent on the advertising from those same developers).

Get out now if you can. Banks have already divested themselves both of their own property (HQs and bank branches) and of their property debt. The clever speculators left the Irish market at least a year ago.

This is a pass-the-parcel game where the last one holding the overpriced package will see it explode messily, devastating their finances and personal security.

Indications from data gleaned from popular sales and letting website Daft.ie show that more and more places are on the market longer, being repeatedly listed at ever lower prices and that a full crash is imminent.

There has never been a soft-landing in a bubble market. There wasn't one with Dutch tulips or South Sea stocks, there isn't one in the US housing market now or the London and Tokyo bubbles from previous decades, and there won't be one in Ireland now.

The market will crash, perhaps by as much as 30% in one year. If you are still in doubt, cast an eye over the excellent web analysis conducted at Daftwatch, and the informed discussions on The Property Pin.

Prices in London took the best part of a decade to recover from their crash in the late Eighties. Prices in Tokyo took even longer to recover. Prices in Ireland are more inflated now than either of those markets ever were.

If you've just taken out a large mortgage, you could be trapped in the property you've just bought for a decade or more, in order to avoid negative equity.

If you have a string of properties, each leveraged off the back of notional equity increases in previous properties, you are extremely exposed and could even find yourself close to bankrupcy like this fella.

The party's over and normal rules of engagement are about to resume, people. Which is good in the long term for all those unable to purchase their own dwelling, but very bad news for those seeking to make money by sitting on their backsides.