Tom Cruise (yes, his real name) and his partner Clare bought their dream house a couple of years ago in the Crotanstown Grange estate, an hour's drive south of Dublin. At the time, the list prices for the new luxury houses were rising at €100,000 ($160,000) a year, with some going for €700,000.
Their house's value soared, then fell hard this year. But it didn't particularly bother them; they had two kids and had no intention of selling.
Their world turned upside down three weeks ago. "We were on holiday in Spain and I wasn't back 20 minutes when my employer told me I had to go," said Mr. Cruise, who was a manager at a local steel fabrication company.
Clare is looking for work but is not optimistic because the hotel industry, where she has experience, is falling apart. "We're still in shock," she said. "I'd take anything at this stage."
Until about a year and a half ago, developments such as Crotanstown Grange promised something akin to the suburban American dream, with neat, trim houses, big kitchens, gardens and parking - features rare or non-existent in central Dublin. But with Ireland having the dubious distinction of being the first country in Western Europe to fall into recession, that dream has since turned into a nightmare for many families.
How did the model economy - the low-tax miracle lauded by economists, neo-conservatives and liberals alike - go from Celtic Tiger to Celtic Catastrophe?
The property market is in genuine crisis throughout Ireland. Yesterday, the Organization for Economic Co-operation and Development, in its Outlook report, predicted the downturn will hit Ireland particularly hard. "Activity is contracting as the severe housing market correction has weakened the wider economy, and the weakness will persist well into 2009," it said.
Everyone - economists, estate agents, bankers, employers - thinks values still have a long way to fall and will make the recession worse. No sector, with the possible exception of the discount grocers, has survived unscathed. The banks are in particularly bad shape.
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But Ireland cannot blame outsiders for the entire mess. "This is a home-made crisis made worse by the international crisis," said Constantin Gurdgiev, the research director in Dublin at NCB Stockbrokers and an economist at Trinity College. "This is the most indebted country in the whole European Union."
The economic numbers are grim. The 6-per-cent unemployment rate is expected to rise to 8 per cent next year, Ireland's Economic and Social Research Institute said last week. Mr. Gurdgiev and other economists think low double digits are possible. In the past year, 100,000 jobs have disappeared. By his calculations, total debt held by financial and non-financial institutions, plus credit to private households, is a staggering 265 per cent of GDP.
A few kilometres away from the Cruises, in the more modest Roseberry estate, Martin Ennis, 34, bought a townhouse seven months ago for €350,000. Too bad he didn't wait. "Prices are definitely going down," he said. "We've dropped to €300,000."
House prices are down 30 per cent from their peak and some real estate professionals said the number is close to 50 per cent in the hardest-hit parts of the county. The Irish Banking Federation says only 27,000 mortgages were written in the third quarter, down from 120,000 in the same quarter a year ago. House construction has utterly collapsed. Ditto car sales, which were down 54 per cent in October. "We are so conditioned to living in the boom years that we're having trouble adapting to this new reality," said Pat Farrell, chief executive officer of the Irish Banking Federation.
