Housing in Ireland: A broken system.
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Silversurfer
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Some of the jobs cannot be sustained until a retirement age of 70.
I'm not going around the block on that one again.
The Horseman
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Fair question.
Very true, the value of labour has fallen drastically. Unaffordable housing has many negative secondary effects on the quality of life of citizens and also on the economy.
That's actually what they do in some states in the USA like Texas. No/low state and local taxes but high property taxes. However there are so many variables in the economy, it's hard to know for certain how it would ultimately effect the Irish economy?
Around 1% of the housing stock changes hands every year.
Prices are set on the margins so taxing all of it a little more has a large impact on price.
If the net yield on housing is 0.25% higher than the net yield on Bonds then institutional money flows into housing. If the net yield is 0.25% lower it flows out. That would reduce the competition from institutional buyers for the existing housing stock. A small increase in tax reduces the net yield. We still need institutional money to build houses so give an exemption for X number of years for those projects or use a different mechanism for the same end.
As we no longer have the ability to use interest rates as tool to reduce volatility in the housing market property taxes, while far less agile a tool, can be used to reduce that volatility.
In the medium term property taxes reduce housing costs so mortgages reduce. The buyer pays a lower proportion of their net income in repayments and property taxes but once the mortgage is paid off they continue to pay the property tax. If someone is old and on a reduced income they should have the option of letting the tax roll up and come off their estate when they die. They keep their home but their children inherit less. Those children, in the meantime, retain more of their earned income.
If we want a society built on the principle of equality of opportunity then reducing tax on the acquisition of wealth through work and increasing taxes on unearned and inherited wealth is desirable. The alternative is a hybrid between a wealthy elite and a State sponsored socialism. If we don't make work the key that allows people to become part of a property owning middle class then the State has to get bigger and bigger and control more of our lives. That's an appalling prospect.
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Another factor is the build specifications are too high, fire regulations, insulation and green agenda stuff adds massively to cost of building and slows down output especially in renovating existing properties. It's way higher here than in uk, if you ever look at the social housing in uk, the standard is lower and more basic than here but the corollary of that is that they have a far larger social housing inventory still in situ rather than derelict like alot of council stock in this country.
It is all very well to have high standards but surely quantity now is the priority, if they had council staff actually inspecting building construction like in uk we would rule our alot of legacy issues
It is all very well to have high standards but surely quantity now is the priority, if they had council staff actually inspecting building construction like in uk we would rule our alot of legacy issues
It's an interesting point. I think we swung so far to high standards because for so many years we had such low standards. These lead to huge bills years later for the government in redress schemes going on to this day. On top of that we signed up to the Paris agreement etc. and contractually agreed to meet targets and face major fines if our carbon output exceeds limits. The UK faces the same dilemma as they also signed up to it.
Their EPC system seems very similar to our BER. However I think the minimum is C for new construction, with the majority actually being built B or A. Our rating divides the letters into sub numbers eg.A1, A2 A3, B1 etc. which the UK does not. So it's hard to tell what is a like for like match. C might sound worse but it's only 3 down the list, so does it equate to our A3, or B1 etc. or directly to our C ratings?
There are certain things which can be done without building new houses. For instance, housing in Ireland is still seen as an investment vehicle as many people who don't trust pension funds. They are more interested in investing in brick and mortar which they see and control. For sure, government can make policies to ensure pension funds are more transparent.
Which regulations are far higher here?
There's a Republican from Texas called Ryan Binkley who is seeking the nomination for President (he won't get it). There's an interview with him in today's Irish Times in which he describes the Wealth Gap that defines the Squeezed Middle very well. He said, “That’s the 34 trillion dollars in debt that none of them have said they are going pay back or even attempt to. And if we don’t do that, we are going to bankrupt the country. Basically, we are making the rich richer and the poor poorer. Because unless you own an inflationary asset like a house or a stock portfolio – which 40 per cent of United States doesn’t – what you are saying is that the bottom 40 per cent is going to get poor.
“So, it is the wealth gap in United States that has been destroying so many people."
That ownership of an inflationary Capital Asset is what divides the young from the old and the rich from the poor.
When we describe a housing affordability and supply problem as a "crisis" rather than a problem we throw the door open to hyperbole and emotion. I think this forum does quite a bit better than most of the Irish media at actually discussing the topics rather than turning it into a pointless and uninformative human interest story or a copy and paste from some left wing lobby group masquerading as a charity.
T McGibney
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When a housing affordability and supply problem is left unresolved for years on end, and in the meantime is worsened by a succession of harebrained policies supposedly intended to rectify it, then it inevitably mutates into an actual crisis.
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The fire regulations and renovation of existing buildings, there is no distinction between new build and renovation in irish regulations, therefore renovation has to be brought to same standard as new build this is prohibitively expensive and labour intensive. Hugh Wallace the architect on TV has been on about it lots of times. In his opinion it is the key reason why there is so little living over the shop in Ireland compared to Europe and UK. Even back in the 80s alot of student accommodation and bedsits were above the shop. That stockpile is all gone now and these units are largely vacant
Well if the government was looking for people to divest their property assets for other non property assets they need to get onto revenue. Any asset like shares or etfs are taxed heavily in Ireland relative to UK and Europe. Ireland holds alot less wealth in the form of stocks and shares compared to UK, France etc because our taxation system actively discourages it. Hopefully they finally see sense regarding etfs and abolish the ridiculous "deemed disposal " regime. This is currently under review
Between 2002 and 2022 (the past 20 years) our population has grown by 30% or 1.2 million people (link below). This, IMO, is the number one reason we have a housing shortgage - building hasn't kept up with population growth. We can talk about taxes and incentives all day, but unless we build a massive amount of houses in / near or urban centres and quickly, it won't make a difference.
It might be a surprise to you that all new build and renovation work in the UK must comply with current regs. too.
I presume you're confusing this with the requirement to improve the insulation values of an existing walls if undertaking significant development work. That on;y comes into effect if the proposed works affect more than 75% of the envelope of the building, and while it does involve additional expense, it makes a lot of sense as not doing so would create damp issues. Most people undertaking so significant a development will tell you it's often cheaper to knock the existing structure and starting from scratch. Much of Europe is at or moving to similar requirements under NZEB targets.
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Will disincentivizing second property ownership through a larger property tax not push more people to sell vacant or second properties helping the situation? It won't solve it obviously but could make some difference.Between 2002 and 2022 (the past 20 years) our population has grown by 30% or 1.2 million people (link below). This, IMO, is the number one reason we have a housing shortgage - building hasn't kept up with population growth. We can talk about taxes and incentives all day, but unless we build a massive amount of houses in / near or urban centres and quickly, it won't make a difference.
And the average number of people per household reduced significantly so that population increase has been compounded by more under-occupancy.Between 2002 and 2022 (the past 20 years) our population has grown by 30% or 1.2 million people (link below). This, IMO, is the number one reason we have a housing shortgage - building hasn't kept up with population growth. We can talk about taxes and incentives all day, but unless we build a massive amount of houses in / near or urban centres and quickly, it won't make a difference.