Central banking + zoning restrictions + government deposit guarantees = property bubble.
Ireland ran this experiment twice, and the second time the developers didn't even have the excuse of ignorance.
The Irish banks, led by Anglo Irish Bank and AIB, channeled roughly 110 billion euros into property and construction loans between 2002 and 2008. The European Central Bank set interest rates for German inflation, not Irish.
Ireland was overheating, credit was cheap, and developers borrowed at rates that made no sense given actual domestic conditions. Lenders like Sean FitzPatrick at Anglo Irish handed out loans the way a government hands out promises: with no reckoning for consequences, because the downside belonged to someone else.
Deposit guarantees guarantee this behavior. When the Irish government issued the bank guarantee in September 2008, covering 400 billion euros in liabilities, it confirmed what every developer already suspected: losses socialize, gains privatize. The Irish taxpayer absorbed the wreckage through NAMA, the National Asset Management Agency, which acquired some 74 billion euros in distressed loans at 57 cents on the euro. The banks got a floor. The citizens got the bill.
Artificially cheap credit, manufactured by a central bank pricing money for 19 different economies simultaneously, lies to every actor in the system. Developers read low interest rates as a signal that real savings exist to fund long-term projects. They don't. The signal is false. Construction booms, land prices detach from any productive reality, and then the physical world reasserts itself: buildings nobody can afford sit half-finished in ghost estates across Leinster.
Sound money advocates call this "malinvestment". Ludwig von Mises already traced the mechanism in 1912. Ireland didn't discover something new, it replayed a very old tape, this time with suits and a Celtic Tiger marketing budget.
The property cycle is running hot again in Dublin as of 2026, with average house prices exceeding 420,000 euros and lending conditions easing under political pressure to address supply. Different institutions, but the incentives are identical, and so will be the outcome.