In recent days, two bits of economic data have emerged which give us an indication of what might be in store for society in the next few years. It may be very early to extrapolate, but it is worth considering if the latest information about house prices and food prices could become a trend.

A few months ago, this column wrote about the likely emergence of a two-tiered property market in Ireland, with houses in Dublin (and in south Dublin in particular) rising while house prices in the rest of the country would continue to fall.

Now, according to property website, this is, in fact, occurring – and at a pace that has caught most of us by surprise.

Dublin asking prices are up 5.3pc in the past year and rose for the second quarter in a row. House prices in Dublin are rising at rates not seen since early 2007 – the very tail end of the property mania. Prices in south Dublin are rising even faster, at 12pc since this time last year.

In contrast, prices outside Dublin fell 8.9pc in the past 12 months and this figure masks a fall of 6pc in Leinster, particularly in the commuter belt around Dublin, and an even more dramatic fall of 12pc in Connacht-Ulster.

According to the Daft report, “prices fell by roughly 3pc across non-city parts of Munster in the three months to June, and prices in the province are, on average, 10pc lower than a year previously”.

One way to interpret the gap emerging between house prices in south Dublin and the rest of the country is that the already wealthy are now seeing their property wealth stabilise and, in some cases, rise. In contrast, poorer parts of the country are seeing their wealth – derived largely from the value of their homes – continue to diminish.

If we add to these wealth figures the data we are receiving on inflation, and particularly in food price inflation, we can see something alarming taking place which, if it becomes a trend, could great exacerbate inequality in Ireland.

In the 12 weeks to June, food price inflation was running at above 5pc, this is 10 times the rate of inflation, which was only 0.5pc last month.

Now let’s look at the impact of the interaction of these developments on people’s everyday lives. Certain price increases affect certain types of people in society in different ways. For example, a 20pc discount in the price of a Ferrari will be of no consequence to the vast majority because most of us can’t afford a Ferrari in the first place. But for those that can and want a Ferrari, a 20pc discount could be worth tens of thousands.

Similarly, a dramatic increase in the price of bread will not be noticed by the rich but will have a huge impact on the weekly budget of the poor. We know that poor people spend a much higher proportion of their total income on food than richer people do. This is a worldwide phenomenon. So when food prices rise, poor people’s income falls much quicker because a bigger part of their weekly budget is eroded by the increase in the price of food.

If the difference between other prices and food prices isn’t too much, this process would be gradual, but if the rate at which food prices in the shops is rising is 10 times faster than other prices – as is the case in Ireland now – you can see how the weekly budgets of poor people will implode.

In contrast, richer people spend much less of their total income on food so the increase in food prices affects them much less and, obviously, the richer they are, the less they notice food prices at all.

Now let’s layer this picture of the poor being made poorer by rising food prices with the evidence from house prices. When house prices rise, people feel richer and, if they sell their houses, they are indeed richer. This feeling of wealth is called the “wealth effect” in traditional economics.

Many, but by no means all, people in south Dublin could be classed as already rich based on income relative to the rest of the country alone. Now we see that their incomes are being added to by increases in their housing wealth.

If this becomes a trend, we will see inequalities exacerbated. We know that children of richer people get a head start in life and so opportunities and income divides in the future become more and more ingrained.

Now look at the trends in house prices outside the capital. As house prices in the commuter belt continue to plummet, the wealth effect is opposite to that in south Dublin. Given that the vast majority of people in negative equity are those who bought in the Noughties, places that saw the most building of estates will be the worst affected.

People in negative equity are not only poor, they are worse than poor because they are in debt. If wealth equates to the value of your assets over the value of your liabilities, those in negative equity are worse than poor.

If the trends in house prices continue, the wealth gap in the country will become more gaping.

Ireland at the moment is far more equal than people sometimes think. If we divide the income of the top 20pc by the income of the bottom 20pc, we see that Ireland is smack bang in the middle of the EU average; less equal than Scandinavia but more so than the Mediterranean countries and the UK.

An equal society is something worth protecting. It is something that we should aspire to, including the idea of treating “all the children equally”. Equality is not only desirable from a societal/democratic/ethical point of view, but also from an economic perspective. If as many as possible have a chance in a society, more people feel they have a stake and more talent will emerge, with people working harder and smarter.

Hard work is infectious. It can set the standard and it can become the norm rather than the exception.

But if our opportunity and income become dwarfed by changes in wealth – driven by serendipitous changes in house prices – then lots of people will see the innate unfairness of housing wealth. Housing wealth doesn’t come from talent, innovation or creativity but rather the feudal concept of location.

We can’t afford for capital to get tied up in this overvalued relic again.

Already the trends in food prices are punishing poor people most callously now. It would be a disaster if we learnt nothing from the housing boom and bust and allowed ourselves to become enchanted by the hollow glitter of shiny trophy assets again.

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