An economic crash isn't around the corner, says economist David McWilliams
Well-known economist David McWilliams is reassuring people that there is no crash on the way.
It follows a warning from the Paris-based OECD yesterday that Ireland needs to control its debt levels if it wants to avoid another cycle of boom and bust.
In its latest report, the think tank said with house prices rising and investment in construction ramping up that “some signs of over-heating are emerging” in the Irish economy.
It warned of a scenario that could lead to a further crash in property should house price increases “induce another property bubble associated with a strong surge in credit growth”.
“The property market is buoyant, as house prices and construction investment are rising strongly.
"Notwithstanding high bank lending rates, new mortgage loans and SME loans (largely driven by construction-related ones) are increasing sharply, albeit from a very low base,” said the OECD.
But David McWilliams thinks we are not in danger of repeating the past property bubble.
"What we're seeing is a very small and very very wealthy sector is dragging up prices whereas last time what we saw was a very large, not particularly wealthy sector - ie: us - was driving up prices.
"So I do think people should stand back and say hold on a second - is the OECD saying 2006/7/8 style crash is around the corner? I think not."
Domestic watchdogs such as the Economic and Social Research Institute and the Irish Fiscal Advisory Council have said that the economy is not over-heating at this time.
