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Northern Ireland's property market bubble: a preliminary analysis

E. Gallagher, Derek Bond () and Elaine Ramsey ()

Applied Economics Letters, 2015, vol. 22, issue 1, 61-65

Abstract: This article applies a recursive regression technique developed by Phillips and Yu (2011) to examine recent property market movements in both the Republic of Ireland and Northern Ireland in the context of an asset market bubble. This technique, which interprets explosiveness in the price series as evidence of the existence of a bubble, provides a method for identifying not only bubble behaviour but also a dating mechanism. Statistically significant bubble characteristics are identified in both series. For the Republic of Ireland, a prolonged period of explosiveness is detected ranging from 1996Q2 to 2007Q2. Interestingly, the explosiveness is stronger in the late 1990s and early 2000s. For Northern Ireland, the analysis identifies a short yet intense bubble when the market in the Republic had matured, extending from 2005Q3 to 2009Q1 and reaching a peak in 2007Q2. These results taken together indicate the possibility of a spillover effect between the two regions; however, further research to investigate this possibility is necessary.

Date: 2015
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DOI: 10.1080/13504851.2014.925044

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