Ireland: Financial Sector Assessment Program: Technical Note-Nonbank Sector Stability Analyses

IMF Staff Country Reports, September 29, 2016

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Both nonparametric and parametric methods suggest that the residential real estate market in Ireland is close to or moderately below its equilibrium level.
Two standard metrics—price-to-income and price-to-rent ratios—show that following a protracted period of overvaluation prior to the crisis and a correction afterward, the market has been close to its equilibrium level in recent quarters.
Households have deleveraged, but are still highly indebted.
Stability analysis results suggest that vulnerabilities among nonfinancial firms have moderated in recent years.

Residential real estate market assessment
- Nonparametric and parametric approaches used to assess equilibrium conditions.
- Price-to-income and price-to-rent ratios tracked to evaluate valuation dynamics.
Household sector
- Deleveraging observed alongside persistent high indebtedness.
Corporate/nonfinancial firm sector
- Vulnerabilities have moderated in recent years according to stability analyses.

Subjects: Banking, Corporate sector, Economic sectors, Financial crises, Financial institutions, Housing prices, Loans, Mortgages, Prices, Stocks
Keywords: balance sheet composition of financial assets, banking sector, Corporate sector, CR, CRE price, current ratio, Europe, evaluation of REE price, Global, household financial assets, Household indebtedness, Housing prices, interest rate, interest rate shock, investment funds, ISCR, liabilities of household, Loans, long-term debt, loss forecasting, Markov regime, Mortgages, negative equity, primary sector, real estate investment trust, sensitivity analysis, Stocks, Tier 1

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