Ground Floor: Last Friday this newspaper reported that a house in Dartry was sold for €10 million, beating the previous price paid for a home in the Dublin 6 postal code by €3.275 million - that price itself having been about €3 million over the auctioneer's guide price.
Not that I'm rushing into print to support the banking industry given some of its worst excesses, but I can't help wondering what kind of fuss would have been made if the report had been headlined "bank foreign exchange rate over 200 per cent higher than previous rate - previous rate nearly 100 per cent higher than estimate given to customer". We'd be talking high-level investigations, a probe into its pricing of foreign exchange trades and demands for more transparent pricing and advertising.
But when it comes to misleading property guidelines - nothing! What on earth is going on with the professionals in that market? I know prices have continued their inexorable climb skywards. I know that the Economist has called a plague on all our houses (so to speak) and continues to predict its imminent implosion. But how can a property sell for 100 per cent over its guide and nobody go ballistic over the guide in the first place? What kind of ludicrous information is being given to people looking at buying houses?
Page 27 of the paper on that date ran advertisements for more auctions. A house on Anglesea Road - always an upmarket favourite - is being guided at €1.75 million. There are, of course, obvious differences. This house only has four bedrooms, the one in Dartry has five. It's not built over a basement. And, of course, the killer blow - it's not red-bricked or Victorian.
Of course, if you want red-bricked Victorian you can amble down to Morehampton Road. There's a red-bricked Victorian there being guided for €2.2 million. It has five bedrooms, three reception rooms and full planning permission for a two-storey mews. So is there really a €7.8 million price difference between properties in adjacent postcodes? Especially when both of those postcodes are "cachet" addresses?
The thorny question of auctioneers' guide prices does raises its head from time to time but the bottom line is that people seem to accept that the auctioneer will get it spectacularly wrong. And not only that, the stories afterwards seem to revel in how much over the guide price a property has managed to achieve. Is there any other industry in the world in which the experts are feted for clearly giving preposterous information or making ridiculous predictions to their potential customers? Are there any other industries where the experts get are so remarkably inaccurate?
In 1943, Thomas Watson, the then Chairman of IBM, announced that there was a world market for maybe five computers. IBM, of course, was the leading IT company of its time. Perhaps Watson's impossibly inaccurate prediction is why it doesn't hold the top spot any more.
Although you can't entirely blame Watson. He was in fairly good company when he dismissed technology - it seems that nobody in the business world 50 years ago had any truck with the concept of computers, no matter how close to the industry they were.
The editor in charge of Prentice Hall's business book division in the US proclaimed to the masses, a whole 14 years later, that he had "travelled the length and breadth of this country and talked with the best people and I can assure you that data processing is a fad that won't last out the year".
And even 20 years after that, in 1977 (when they'd had the benefit of Star Trek to give them a view of the future), Ken Olson, who founded Digital Equipment Corporation, told us that "there is no reason anyone would want a computer in their home".
It's not just in business, of course, the history books are littered with those who have predicted the demise of civilization as we know it. Robert Heilbroner's An Enquiry into the Human Prospect predicted that the end of the industrial society was just around the corner because the world was about to run out of resources. He projected that if world industrial production were to continue to grow at its 1974 rate, demand on resources would grow a thousandfold and we would simply run out of energy.
Which is not to say that the premise wasn't right, just that as Alfred Marshall (a British economist) pointed out "nature does not take leaps". We adjust over time. And so, in the teeth of the oil crises of that time, we adjusted (not, perhaps, as much as we could have or should have, but as much as we needed to).
In the 1930s, the US Census Bureau - where you'd assume they had a fairly decent level of brainpower on the payroll - made a prediction that the population would peak at 150 million and probably never exceed that level. At the time, the population was 130 million. Now it's more than twice that.
Of course, economists are frequently derided for getting their predictions wrong. Every year they are asked how the markets will perform and every year they make a heroic stab at it, but every year there are as many spectacularly wrong predictions as not-too-far-off-the-mark (but not entirely correct) ones.
A study by the National Bureau of Economic Research in the US found that analysts' annual economic growth estimates for any coming year are typically incorrect by about 100 per cent.
And technology (those computers that we didn't ever think we'd use) hasn't made the analyses any more accurate. The US stock market is the most researched and analysed market in the world, but nobody has ever been able to predict exactly where it will close on December 31st any given year.
Maybe we should get rid of the so-called experts altogether. Spread-betting gives a much more accurate picture of a market. And you don't pay exorbitant fees either!
