Free Money - The Effects of Irish Government Philanthropy on Real Estate
||Free Money - The Effects of Irish Government Philanthropy on Real Estate
||Book of Abstracts: 2005 European Real Estate Society conference in association with the International Real Estate Society
||At the height of the "Celtic Tiger", the Irish Government introduced a number of measures designed to reduce inflation, (particularly increases in Real Estate prices) and dampen domestic expenditure. Amongst these measures, in a unique experiment, the Irish Government offered Irish residents an unbelievable offer, they paid you to save! By saving a monthly sum, (up to €254 per month), in a "Special Saving Investment Account", (SSIA) for five years, the government would give you an extra 25% of the total invested, on top of any interest or dividends obtained. As a result almost 1.2 million SSIA accounts were initiated by Irish residents. Current projections estimate that the final sum in SSIA's accounts will be over €15bn. From April 2006 the SSIA accounts will begin to mature. A "wall of money" is about to hit the Irish economy. While Ireland is too small to influence world prices or the Euro interest rate, this "wall of money" may have a dramatic effect on non traded (internationally) goods, of which real estate is a prime example. This paper explores both the effects of the SSIA's on the real estate market since its inception and its potential effects on its fruition using micro, macro and survey data.
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