I have written a number of times about the usefulness of the Phillips GSADF test for bubble detection. It has been used extensivly for bubble detection. google “gsadf bubble” if you dont believe me. So…
Well, the bad news is, according to this test, Dublin property IS in a bubble and probably has been since May. I havent deflated these prices by the CPI but recall that inflation has been, to put it mildly, muted over the last while. When the blue line crosses the red line, a bubble is declared.
Supply conditions, plus a resurgent economy, are seen as the main drivers, which makes this different to the last one. Total mortgage credit is still contracting. Supply takes time and there is no way the government in the runup to an election is going to dampen down the economy. So, this one might run for a bit…
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