Brendan Burgess
Founder
- Messages
- 52,307
Original document : [broken link removed]
It's only 4 pages of text and very well argued and easy to follow, if you skip one complicated looking formula.
In principle, the potential application of a macro-prudential suite of measures in the Irish property market is a welcome and prudent development.
...
However, we feel that in the interests of both efficiency of policy implementation and the transparency with which these measures are communicated to key
market participants, these levers should be applied on a counter-cyclical rules basis. This is not the case with the present proposals. In that context we would
question both the absence of such rules underpinning the proposed framework and the application of the proposed measures in the Irish market at the present
time.
...
2. An increasing body of research in the macro-prudential area now argues for the use of rules in implementing these policy levers rather than discretion.
3. In that context, it is regrettable that no such rule has been outlined by the Central Bank in proposing these measures. Any such rule, we believe, needs
to take into account cyclical patterns within the housing market i.e. the rule should be counter-cyclical in nature with policy measures being tightened if
the rule indicates the presence of too much credit, for example, in the market and loosened if the opposite is the case.
...
in McQuinn (2014), for example, the results of four standard models of Irish house prices suggest that, as of Q4 2013, Irish house prices still appear to be undervalued.
...
Given the already very low levels of housing construction, there is a danger that the adoption of these measures may have additional, adverse implications for future residential supply. Both property developers and financial institutions may be concerned about movements in future prices and the potential affordability
of prospective mortgagers.
It's only 4 pages of text and very well argued and easy to follow, if you skip one complicated looking formula.
In principle, the potential application of a macro-prudential suite of measures in the Irish property market is a welcome and prudent development.
...
However, we feel that in the interests of both efficiency of policy implementation and the transparency with which these measures are communicated to key
market participants, these levers should be applied on a counter-cyclical rules basis. This is not the case with the present proposals. In that context we would
question both the absence of such rules underpinning the proposed framework and the application of the proposed measures in the Irish market at the present
time.
...
2. An increasing body of research in the macro-prudential area now argues for the use of rules in implementing these policy levers rather than discretion.
3. In that context, it is regrettable that no such rule has been outlined by the Central Bank in proposing these measures. Any such rule, we believe, needs
to take into account cyclical patterns within the housing market i.e. the rule should be counter-cyclical in nature with policy measures being tightened if
the rule indicates the presence of too much credit, for example, in the market and loosened if the opposite is the case.
...
in McQuinn (2014), for example, the results of four standard models of Irish house prices suggest that, as of Q4 2013, Irish house prices still appear to be undervalued.
...
Given the already very low levels of housing construction, there is a danger that the adoption of these measures may have additional, adverse implications for future residential supply. Both property developers and financial institutions may be concerned about movements in future prices and the potential affordability
of prospective mortgagers.