Buying a house is something that only about 4% of people are doing at any one time. Those of you that already own a house will have no interest in what the Central Bank does or does not do. The fact that the Central Bank have not admitted that the so called original 'central bank guidelines' in the 1990s NEVER existed and its now taken 6 years since the onset of the crisis to come up with ONE strategy for dealing with house prices - we will put in place a 20% deposit - that will teach them. This is a scandal that it takes six years for a feeble response of one dimension in response to the huge catastrophic car crash that was the housing market. What exactly have the Central Bank been working so long at? This is a complete and utter farce.
When you have a market at the very bottom or slightly off the bottom, putting in place a 20% deposit is simply demonstrating that as a Central Bank that taking action - any action - is better than doing nothing. Even if its totally meaningless - but you rely on others not having access to information that would call this policy what it is - a complete and utter sham when nothing else is being done about the rest of the market. This is the Central Bank that showed leadership in calling the bailout. The same Central Bank who know that housing was the principal reason why the nation went completely beserk in the first place. So why would that Central Bank not call the rest of the issues - and force the Government into putting together a statutory National Strategic Housing Group to take the tasks one by one and deal with them? It told us to go to Europe and get a bail out. What is the pussyfooting about? Why one meaningless element when there is a symphony of connected issues to be dealt with?
If prices rise by say 4% a year - which they would do when an economy is growing (as ours is) ceteris paribus as economists say. In other words the 20% deposit is a bogus statement by the Central Bank when there are much more urgent issues in the housing market that need to be addressed.
The first is simply to have reliable statistics on the market in the first place. Apparently there were so many empty houses in the nation that whatever else was wrong, we had more houses than you could shake a stick at. Unfortunately the reality eventually started to come home to roost - the Mother was asking me why were rents going through the roof and how the hell could Dublin prices be rising at 20% given that there were so many empty houses and ghost estates and all that and that were vacancy rates so large that .. we didn't need to build for the next 500 years. So years on after this collapse we still do not have accurate figures on any of this. But rents are rising and property is still rising but may moderate a bit. How do I explain to the Mother what is going on?
One of these figures that we should compare against is Germany. The number of houses in Germany is about 480 per 1000 - and our number is 430. Germany has had very little house price inflation and most certainly no collapse and you wonder has it anything to do with the slight problem that there are lots of houses for the Germans to live in and that 'family sizes' in the broadest sense of the word are about 2.1 - and does Ireland have any similar traits so that 'family size' - could it be heading to 2.1 - maybe it would if there were houses enough for the 90,000 on the 'waiting lists'. But all these figures, opinions and comparisons need to be gone through. Economists - who assume things - assume that there is 'an annual demand for houses' or some such notion. When you have 430 houses per 1000 and there is huge evidence of 'family units' at 2 or 2.1 then 430 per 1000 means you have a shortage.
The Germans do social housing. We gave up in 1989. We built social 6.250 houses in 1974 when the total number of houses built were 26,000 - and we had no money then apparently. We have built or bought so few of these since 1989 that you actually almost say we built none.
The Germans may not occupy the house that they do buy. They rent it because its tax efficient to do so and then they rent off another guy. In fact you could do the same here as a buy to let and you could still get 'home loan interest relief' for the rented residence for the repair, upkeep and development of your principal residence on any interest on borrowings for those purposes and it does not have to be a secured loan. Not widely publicised but there you are - cat out the bag.
A second issue is just what is involved in putting together say a 300 house development. Do we know what is involved with regulations, bureaucracy and planning to complete a development? It will be a shocking result. [Identified in the UK as a major barrier - but when it took 10 years for our housing supply to double versus 18 months in the US - who had a bigger mess?]
A third issue is the notion of Community Housing / Renting and whether say Irish people should be able to invest in community housing. In other words affordable housing where the investors (us) get a reasonable return and house owners (us) can buy or rent at affordable interest rates or rent.
I am simply appalled at this weak Central Bank and its abuse of the machinery available to it.
They have shown the same approach to the forthcoming car crash as they did to the previous one. Expensive and lazy intellectually. In the name of the people GO!
When you have a market at the very bottom or slightly off the bottom, putting in place a 20% deposit is simply demonstrating that as a Central Bank that taking action - any action - is better than doing nothing. Even if its totally meaningless - but you rely on others not having access to information that would call this policy what it is - a complete and utter sham when nothing else is being done about the rest of the market. This is the Central Bank that showed leadership in calling the bailout. The same Central Bank who know that housing was the principal reason why the nation went completely beserk in the first place. So why would that Central Bank not call the rest of the issues - and force the Government into putting together a statutory National Strategic Housing Group to take the tasks one by one and deal with them? It told us to go to Europe and get a bail out. What is the pussyfooting about? Why one meaningless element when there is a symphony of connected issues to be dealt with?
If prices rise by say 4% a year - which they would do when an economy is growing (as ours is) ceteris paribus as economists say. In other words the 20% deposit is a bogus statement by the Central Bank when there are much more urgent issues in the housing market that need to be addressed.
The first is simply to have reliable statistics on the market in the first place. Apparently there were so many empty houses in the nation that whatever else was wrong, we had more houses than you could shake a stick at. Unfortunately the reality eventually started to come home to roost - the Mother was asking me why were rents going through the roof and how the hell could Dublin prices be rising at 20% given that there were so many empty houses and ghost estates and all that and that were vacancy rates so large that .. we didn't need to build for the next 500 years. So years on after this collapse we still do not have accurate figures on any of this. But rents are rising and property is still rising but may moderate a bit. How do I explain to the Mother what is going on?
One of these figures that we should compare against is Germany. The number of houses in Germany is about 480 per 1000 - and our number is 430. Germany has had very little house price inflation and most certainly no collapse and you wonder has it anything to do with the slight problem that there are lots of houses for the Germans to live in and that 'family sizes' in the broadest sense of the word are about 2.1 - and does Ireland have any similar traits so that 'family size' - could it be heading to 2.1 - maybe it would if there were houses enough for the 90,000 on the 'waiting lists'. But all these figures, opinions and comparisons need to be gone through. Economists - who assume things - assume that there is 'an annual demand for houses' or some such notion. When you have 430 houses per 1000 and there is huge evidence of 'family units' at 2 or 2.1 then 430 per 1000 means you have a shortage.
The Germans do social housing. We gave up in 1989. We built social 6.250 houses in 1974 when the total number of houses built were 26,000 - and we had no money then apparently. We have built or bought so few of these since 1989 that you actually almost say we built none.
The Germans may not occupy the house that they do buy. They rent it because its tax efficient to do so and then they rent off another guy. In fact you could do the same here as a buy to let and you could still get 'home loan interest relief' for the rented residence for the repair, upkeep and development of your principal residence on any interest on borrowings for those purposes and it does not have to be a secured loan. Not widely publicised but there you are - cat out the bag.
A second issue is just what is involved in putting together say a 300 house development. Do we know what is involved with regulations, bureaucracy and planning to complete a development? It will be a shocking result. [Identified in the UK as a major barrier - but when it took 10 years for our housing supply to double versus 18 months in the US - who had a bigger mess?]
A third issue is the notion of Community Housing / Renting and whether say Irish people should be able to invest in community housing. In other words affordable housing where the investors (us) get a reasonable return and house owners (us) can buy or rent at affordable interest rates or rent.
I am simply appalled at this weak Central Bank and its abuse of the machinery available to it.
They have shown the same approach to the forthcoming car crash as they did to the previous one. Expensive and lazy intellectually. In the name of the people GO!