# Houses prices to fall 20%



## FFF (29 May 2003)

I see "The economist" is predicting a fall in house prices worldwide of 20% and a woman on radio one news is telling people not to buy but to rent. What do you all in AAM think of this - is the economist talking through it's a***


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## Jasper (29 May 2003)

I think they're predicting heavy property market falls in several countries, not just Ireland


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## Rubes (29 May 2003)

Would love to see where "The Economist" got its data from for that one. How can you compare property prices on a global basis when there are so many local factors to take into consideration??!!!!!? The mind boggles as to who gets away with writing this stuff!!!!

Even UK house prices cannot be taken as guide for Ireland/Dublin prices - there are many local factors which influence the price of property.

Even if house prices do drop by 20% that's only a problem if your intending to move house - otherwise it is irrelevant to you. Primarily a house has to be a home - not just seen as an investment.

Since no-one can predict the future all anyone can do is make a decision based on the information available to them at the time - that may be right or wrong. But hey, that's the way it goes.


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## ClubMan (29 May 2003)

*and a woman on radio one news is telling people not to buy but to rent*

Mystic Meg?


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## Elcato (29 May 2003)

Not to mention the fact that in 1990/91 the prices in England slashed by morethan half and nothing happened to the market here, in fact we got stronger. So I wouldn't worry about the 'economist' world statement.


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## LTB (29 May 2003)

I don't believe that houes prices are going to fall, and certainly not to the extent of 20%.  We have been told several times to hold off on purchasing houses beacuse the "economics" predicts a fall in the price of this market - but has anybody seen a worthwhile drop yet?
I believe that the housing market is relatively stable at the moment, and even if prices did drop this year, I'm sure it would be a minimual drop and it wouldn't be long before the prices come back up again.  I'm about to buy a house and certainly wouldn't postpone my plans going on that prediction.  I say, if you want to buy a house, go for it now!
Just my opinion, don't know what the rest of you guys think!!


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## Droxol (29 May 2003)

*It will be.*

OnBuisness

Survey predicts collapse in Irish property prices 

May 29, 2003 
(13:35) 
A survey carried out by the Economist magazine is predicting a collapse in property prices in Ireland and worldwide. The magazine, which will be on shop shelves tomorrow, said that in many countries the stockmarket bubble has been replaced by a property-price bubble and sooner or later that bubble is going to burst.

The Economist studied data going back to 1975 from estate agents, lending institutions and government agencies and found that the price of homes in six big developed countries, including the US will drop dramatically in the near future. 

It also said the consequences will be far more serious and painful than the current plunge in the stockmarket.
advertisement 

The survey authors advise anyone who needs to move for work or family reasons to consider selling and then renting until prices drop. However they say most people will have to stick it out and watch their wealth dwindle. 

==================


1. The stock market _is_ global !!


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## FFF (29 May 2003)

*House Prices*

Would it be too cynical to suggest that this is being used to sell copies of the "The Economist" as house prices is something that affects a lot of people.


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## TheGreenMan (29 May 2003)

QUOTE: "all anyone can do is make a decision based on the information available to them at the time"

Well, I think that's what many people are doing i.e. making their decision based on the information available now.  Quite a few saying there will be at least a correction.

I heard on the radio that apparently the number of first time buyers in the UK (on average) is down by 15% on this time last year; and down by 30% in London


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## joe (29 May 2003)

*house*

"The survey authors advise anyone who needs to move for work or family reasons to consider selling and then renting until prices drop. However they say most people will have to stick it out and watch their wealth dwindle. 
"

This post will be deleted if not edited immediately I am going to get Playboy instead anymore - at least you can look at the pictures !!


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## Rubes (29 May 2003)

*Re: house*

Yep - in any decision all you can do is to make a decision based on the information available, some of which could well be conflicting e.g. estate agents still predict rising prices (albeit at a lower rate than before) while "The Economist" predicts drops of 20% - rather wide varyings there.

I fail to see the relevance of the UK property situation to our own - there are certain factors which make our situation unique to the UK e.g. lack of decent public transport in Dublin forcing people to buy close to the city to avoid a 15 million hour commute. It is generally unwise to take the trends from another country and extrapolate them out as the future for the Irish market


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## daltonr (29 May 2003)

*Re: house*



> some of which could well be conflicting e.g. estate agents still predict rising prices (albeit at a lower rate than before) while "The Economist" predicts drops of 20% - rather wide varyings there.



Of course the difference between Estate agents and the economist is that the Estate Agents have vested interest in keeping everyone thinking that prices will go up forever.

Apart from the chance to make a headline the economist doesn't care whether prices go up or down, and I would be happier that their analysis is at least "reasonably" objective.

The Buyer can not trust an estate agent, EVER.

-Rd


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## Rubes (30 May 2003)

*Re: house*

Daltonr,

I agree entirely with your sentiments re estate agents - they have vested interests. However, even a cursory look at the prices of houses sold in Dublin (the only place I know about) over the past few months shows an upward trend. 

The crux of this argument is that if you are buying a place to live for the foressable future then a drop in house prices is irrelevant to you. Basically, if you want/need to buy then go ahead, if your looking at it from an investment perpesctive then that may be a bit more dodgy.

I was always taught "nest, don't invest" - reasonably good advice for those just starting out on the property ladder.


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## Moneybags (30 May 2003)

*Re: house*

Hi Rubes,

I accept your point that the fundamentals of Irish property are different from the UK or anywhere else due to demographics, etc. 

But isn't it true that a lot of the demand for property worldwide has been driven by the same two factors: low interest rates and a serious lack of investment alternatives. 

I think that a wall of money searching for a home has certainly created a bubble in certain sections of the property market. What would Joe Kennedy say if he could hear the shoe shine boys tipping holiday villas in Croatia?


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## Fairfield (30 May 2003)

*Economist predictions*

As they say, if you predict something for long enough eventually you will be right - and eventually the Economist will be right. I remember reading an article in the Economist at least 3 years ago roughly along the same lines.

My own view is that this time they are right. House price increases up to now can be rationalised on the basis of
- shift to structurally lower interest rate environment
- strong demographic trend (baby boomers)
- sharp fall in unemployment

Of the above three factors, only one is still intact -demographics, and even this will weaken to some extent in the near future. Interest rates are low and going lower, but the magnitude of the drop from 8/9% to 2/3% over the last 10 years that we have seen is finished. And unemployment is begining to rise and set to continue especially if we don't adjust to the new economic reality of post- Celtic tiger and start to reduce prices (there is avery good article by Jim O'Leary on this topic in the IT today).

So my guess is that there is 20% froth that could come off the residential market very easily. If you are owner occupier, who cares. If you are thinking of buying to occupy, don't delay as the timing of this is anyone's guess. But for investors, the easy money has been made and it may be time to take some chips off the table.

As far as commercial is concerned we are already seeing the office segment under price pressure with rents easing back.

Watch this space.


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## Ludraman (30 May 2003)

*Re: Economist predictions*

Hi Fairfied,

You've left me confused. You have just said;

"If you are thinking of buying to occupy, don't delay as the timing of this is anyone's guess"

.........so what should I do, as it's "anyones guess"?


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## justwondering (30 May 2003)

*house prices*

With a requirement for c55k house starts a year over at least the next 5 years ...what could be the triggers ?  on the balance of probabilities we can expect stagnation not the 20% reduction as predicted.


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## martin (30 May 2003)

*re: house prices*

You can read tomorrow that house prices have increased in April by 1.3% with the greatest increase being outside of Dublin.

Interest rate reduction of probably .5% next week and another expected by year end aware not all being passed on).   So, Fairfield interest rates have not stopped going down.

The only thing to trigger a fall in house prices in the short term will be unemployment stats.


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## Fairfield (30 May 2003)

*House Prices*

Ludraman

What I mean is if you are buying as an owner occupier, don't delay in the hope that the market will come back 20%, because while I believe that it will, it may not happen for a while. And as it is a long term purchase (presumably if you are buying to live there) 20% is neither here nor there on the basis that things will improve longer term.

Martin - yes I know interest rates are going lower. What I meant was that the magnitude of the fall in interest rates which was a big driver of the house price surge, is now behind us and no longer a factor. i.e. interest rates may fall from 2.5% to 2 or 1.5%, but this is not going to have the same affect going forward as a fall from 8/9% down to 2/3%.

And as for demand for c. 55k houses, this is more than being met by c. 60k housing starts. Supply has well caught up on demand.


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## Bearish (30 May 2003)

*Re: House Prices*



> The only thing to trigger a fall in house prices in the short term will be unemployment stats



Dont under estimate the effect setiment can have on any market in the shortrun!


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## rainyday (2 Jun 2003)

*Re: House Prices*

See here for the original Economist article


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## Sean (4 Jun 2003)

*House Price Fall of 30%*

I'm just after reading the Economist article, and from what I can see they are not saying there will be a fall of 20% in the Irish property market, but that there will be a fall of at least 30%...

QUOTE (from article):-
"This survey will conclude that the latest housing boom has inflated bubbles in several countries, notably America, Australia, Britain, Ireland, the Netherlands and Spain. Within the next year or so those bubbles are likely to burst, leading to falls in average real house prices of 15-20%* *in America* and *30%* *or more elsewhere* over the next few years, in line with average price declines during past housing-market busts. This time, however, with inflation so low, house prices will fall more sharply in money terms than they did in the past."


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## 0950 (4 Jun 2003)

*Landlord & Tenant Legislation*

Will the proposed legislation cause Landlords to sell investment property and hasten the fall in house prices?


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## Catipillar (4 Jun 2003)

I know that in Kilkenny there are houses on the local paper for the last 4 to 6 months - going nowhere!

I think the auctioneers will keep the prices up - and the builders will slow down the number of houses being built in order to maintain the supply and demand problem, thus keeping the prices inflated.

McInerneys are masters of this - and people end up purchasing houses at hugly inflated prices. They release 5 and 6 houses at a time on the market out of a 150 house development. It estates like these that we will see the prices drop and in some cases a lot lower than the borrowed amount.

What's happening in other parts of the country?

I think its good that this report has come out as the property developers and auctioneers seem to be the only ones broadcasting the current house price increases?


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## Bearish (4 Jun 2003)

> Will the proposed legislation cause Landlords to sell investment property and hasten the fall in house prices?




I would imagine that landlords will not be at all happy about the new tennacy legislation. Some landlords may well sell their properties and take their profits seeing this as the height of the market and rental levels are decreasing. Of course if enough landlords do that, then the sell off can, like any other asset market, become a bit of a panic!


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## Tom (5 Jun 2003)

*Price rises*

House prices may well fall in the future but currently they're still going up.One example is Allendale in Clonsilla.Last week they were quoting 230k for a 2 bed, this week its gone up to 245k!.Anyone looking to buy in Dublin at the moment will find it hard to believe theres a slowdown in the market.


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## 0940 (5 Jun 2003)

*House Prices*

Tom,

House prices may be increasing and will perhaps increase further after today, if there is a reduction in interest rates. It seems as if many first time buyers are putting their futures in hock for the sake of owning a property.
30 years is a long time and how many people will be or want to be working at 60 + out of necessity to finance a home loan. House prices will fall within the next couple of years and there will be more choice and better value.

Regards
0940


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## Tommy (5 Jun 2003)

*Re: House Prices*

People should note that the article linked above is only one of several articles in the current issue of the _Economist_ on house prices.


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## mcl (6 Jun 2003)

I know that no one can predict the market but I just want to get this off my chest.

I have 2 children and lease is up , difficult to find unfurnished properties in the area I am looking in, I need to stay for schools etc.  

I have found a property I can afford - even if rates increase significantly, got a deposit etc.  I am happy with location and the property itself.  I am not saying it is worth the money but I like it.   Ideally I would like to move to bigger in 5 -10 years but I do not necessarily need to .

Everyone is saying do not buy - prices will fall.  I have to say I feel that prices will probabley fall at some stage how and when and for how long is a different matter.

AM I mad to buy now  or once you are home owner do fluctuations really impact on your day to day life.


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## ninsaga (6 Jun 2003)

MHO - now is the time to buy (well actually 5 yrs ago was the time to buy but hey ....)- yes some time out there house prices will fall - but the big question is, will they fall below current prices or will they continue to climb & then fall to a level that is still above current prices- no one can tell for sure.


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## Tommy (6 Jun 2003)

> Everyone is saying do not buy - prices will fall



Are they? I thought the consenus among most informed commentators at present is that it would be foolhardy to postpone buying a place to live in simply on the off-chance that prices might dip in the future.


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## know all (6 Jun 2003)

*They are!*

If Margaret Doyle (wrote the latest article for the economist) can be considered an "informed commentator", she says to wait until prices fall until you buy - so I heard her say on RTE1 last week.


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## Tommy (6 Jun 2003)

*Re: They are!*

Her opinion would be at variance with many other respected commentators and economists - even those in the "bear" category. Doctors differ...


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## rainyday (6 Jun 2003)

Hi MCL - If you like it, buy it - Price rises/falls are academic unless/until you need to move from that property. The risk of losing your chance to get onto the property ladder must be weighed up against the risk of price falls.


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## Bearish (6 Jun 2003)

mcl

If you have found a house you like, can deal with increases in interest rates and dont mind if your property value falls in the short-term then you should definitely buy.

Most FTBs are not in this situation. They are stretched financially and any small increase in interest rates (2%-3%) would prove difficult for them. In addition most are buying small 2 bed units in the expectation of trading up in 3-4 years. They therefore can't afford to experience negative equity in order to realistically trade up in this period.


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## Drexxo (9 Jun 2003)

*Rents plummet*

There is talk of a mass flee from investor property, rents ARE falling and stocks are new seen as a better alternative.. also alot of first time investors are getting gittery, as they stretched too much..


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## mcl (10 Jun 2003)

*Rents plummet*

Hi all,

Thanks for your advice, it was very welcome.  Paying 10% deposit on house today.  I have decided if I like the house and can afford it there is no point holding off.  Fingers crossed!

Regards,

Mcl


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## shnaek (12 Jun 2003)

*House prices*

I recently ceased renting in Limerick and I had a good chat with my letting agent before I left. He told me of many of his colleagues in Dublin who are finding it hard to rent places. 
I am now in Mullingar and there are plenty of rental properties available here which have been on the market for months. Not to mention houses which aren't selling. I heard one guy react with horror at the suggestion that he should drop his letting price. 
"But that would mean I'm not even covering my mortgage!" he said.
I have to wonder also what effect that the end of the ten year period on some section 23 investments will have over the next few years.
Top that off with the tendancy for people to over-react to certain events and I have to admit that I would hesitate to buy for the next year anyway just to see how things will go. I don't believe house prices will rise too much in that time. 
Of course I could be proven wrong!


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## Delboy (12 Jun 2003)

*House Prices*

As far as I can see, House prices are still racing ahead.

An estate in Leopardstown where a friend of mine bought last year for €340k - houses are now guiding €370 -€380K
In Harolds X, I have been outbid on several houses since xmas in 1 particular area.Now, I'm not even going to look at the latest houses on the market there, as the prices have gone from a €330k selling price to over a minimum €370k asking price !!!!!!!!!!!!!
And I see TSB have said that mortgage borrowing so far this year is 35% up on last year. And yet Estate Agents are saying that house price rises are in the mid-high single digits in terms of %'s.
Looks like the mandarins in the Central Bank will be scratching their heads again.......


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## declan1 (2 Jul 2003)

*economist*

a writer above suggests he knows of no recent falls in the housing market. Not true. The market had dropped back over 12% by xmas 2001. December that year saw the governemnt roll back the bacon report to give incentives for investors: i.e. tax relief. This was because ahern would not introduce proper rent controls like the rest of europe, therby alienating the building lobby who bankroll him. The irish housing market is a mirage, propprd up artifically by a cowardly venal government afraid to take on big business lobbies (as also with insurance). I lived in the uk when the market collapsed radically in the early nineties. Low interest rates and the euro are contriving to convince young irish people that they can afford mortgages in the long term. They can't. Unemployment is also rising radically and will put the skids on the housing market. If anything, i think the economist was being conservative in its prediction of a 20% fall


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## Delboy (4 Jul 2003)

*10,000 houses for FTB's*

What effect will the announcement by the Gov. today of 10,000 houses on state land being built over the next few years, have on the property market in and around the capital?
I can definitely see it hurting the rental market but maybe more so around West Dublin ,where the majority of these houses will be built.
I think it's a good idea although I'm sure the criteria will be much in line with what is in place for the shared ownership schemes etc, i.e. max income €30,000. So a lot of FTB's over the age of 25 or so will still find it tough to buy as they won't be eligible. But then again this many houses aimed at FTB's will help to dampen house prices on new developments.

I know the devil is in the detail (and the timescale) for all of those, but is this the 1st move aimed at bringing sanity back into the Irish proprty market.
(also noticed today, the constitutional body set up by the Oireachtais to investigate land ownership rights in the constitution, had it's 1st sitting today)


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## GeoffreyOD (5 Jul 2003)

*This is a stroke.*

I'll be interested to see who gets the contract to build these affordable houses.

I'll be interested to see how much these affordable houses cost to buy.

Now the property developers don't even have to stump up money to buy a land bank.

I foresee very modest 3 bed semi-Ds costing 50,000-60000 to build and being sold for in excess of 130,000

10,000 houses with 70,000 profit each to the developer is 700 Million profit over 5 years and no negative press for transferring the nation's wealth to the private sector.

This land should have been sold on the open market.
The nation needs the money .  The smaller developers would have developed the land and the larger  developers couldn't have justified increasing their land bank.
The developers will benefit out of this more than anyone else.


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## rainyday (6 Jul 2003)

*Re: This is a stroke.*



> the larger developers couldn't have justified increasing their land bank.



Why not? I can't see any reasons why the larger developers wouldn't be able to outbid the smaller developers as usual?



> modest 3 bed semi-Ds costing 50,000-60000 to build



Where do you get your figures from, Geoffrey? They are quite different to the costs quoted by a leading academic on the radio yesterday who quoted figures in the region of 150k-200k as the cost price. This is supported by the Society Chartered Surveyors Table of Rebuilding costs which gives a cost of €157 per sq foot and a typical size of 1023 sq foot for a 3-bed semi (total of €161k) - Admittedly this would include site clearance costs but it's still a long way from €50k-€60k - Where did you get these figures from?


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## mairead44 (6 Jul 2003)

*EU*

When the 10 new countries join the EU next year will it have an adverse affect on the economy? 

Will Ireland get less funding from the EU because of the high inflation.


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## Eddie (10 Jul 2003)

*building costs*

"Where do you get your figures from, Geoffrey? They are quite different to the costs quoted by a leading academic on the radio yesterday who quoted figures in the region of 150k-200k as the cost price. "

If thats the case the theres a lot of builders around the country who are building houses at a loss.Just look at the new house prices in areas outside Dublin and you'll see new houses a lot cheaper than that and they had to pay for the site.Even in places like Balbriggan you can buy houses for less than 200k.


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## K19 (17 Jul 2003)

*UBoat*

Keep renting chappies - cheap houses to be had soon ! With all this unemployment this will get really soggy soon !


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## darag (18 Jul 2003)

*Re: UBoat*

For once I agree with GeofreyOD.  This scheme is
nuts.  Looking at this from a financial point of
view, effectively the government is giving a grant
of perhaps 100,000 euro (roughly the cost of a
site) per head to a small segment of the population.
Just because the government owns the land doesn't
mean giving it away costs doesn't cost them
anything.  They could sell the land and just hand
out the 100 grand directly to the first time buyers
or use the money for something else.

Also the claim that the builders will not be allowed
to make a profit is either touchingly childlike in
its communistic naivety or a cynical ploy to divert
public funds to the building lobby.  I can see the
advertisement now - "invitation to tender to build
houses but you're not allowed to make a profit".

Also handing out such huge grants to certain
individuals is completely unfair.  What if you're on
35k a year?  Why should someone on slightly less
salary than you receive a bounty of a 100 grand from
the government?.  It would be worth your while to
ask for a pay cut in work.  In any case, no matter
what happens the scheme will be oversubscribed and
so effectively some sort of lottery will have to
take place.  How is it going to feel to lose in this
lottery while seeing friends or acquaintances win?
This is terrible government policy.

Finally, the 10000 houses will not increase the
overall supply but instead will just divert
resources from existing building so it will probably
have no effect on improving affordability for the
unlucky who do not "win" one of these houses.


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## rainyday (18 Jul 2003)

*Re: UBoat*

Hi Darag - I have to disagree.



> effectively the government is giving a grant
> of perhaps 100,000 euro (roughly the cost of a
> site) per head to a small segment of the population.



No, it's not - It's about getting a roof over the heads of people who wouldn't otherwise be able to afford to buy a house in this inflated market. There will be restrictions built-in to ensure that if they sell the house within a certain time-limit, they have to repay the benefit.



> They could sell the land and just hand
> out the 100 grand directly to the first time buyers



Why not just hand it straight over to the builders? Any cash in the hands of first-time-buyers is snapped up by the builders. They are able to do this because of the excess of demand over supply in this market.



> I can see the
> advertisement now - "invitation to tender to build
> houses but you're not allowed to make a profit".



There is no proposal to restrict/eliminate the profit made by builders when building. The proposal is designed to eliminate the windfall, non-value-add profit made by developers/landowners. This is the major contributing factor in our house price problem.

There need not be any such restriction on the tender. Simple market economics will apply, i.e. the guy who gives the lowest quote (subject to meeting quality/legal/tax criteria) will get the tender. Given that the monopoly of Irish commercial builders has been broken by foreign entrants over the past few years, I have no reason to expect that this won't be a real competition, getting value for the buyers.



> What if you're on 35k a year? Why should someone on slightly less salary than you receive a bounty of a 100 grand from the government?. It would be worth your while to
> ask for a pay cut in work.



This applies to any Govt benefit which is based on income, such as 3rd level maintenance grants, medical card. It isn't really a good reason for not proceeding with such a scheme. 



> In any case, no matter
> what happens the scheme will be oversubscribed and
> so effectively some sort of lottery will have to
> take place. How is it going to feel to lose in this
> lottery while seeing friends or acquaintances win?



Again, this is not a good reason for not proceeding with the scheme, just because it might hurt the feelings of those who don't get a house. They will be no worse off than they are today. Indeed, they will probably be better off as there will 10,000 less buyers competing for the normal FTB houses, so this will inevitably result in price drops or levelling out.



> the 10000 houses will not increase the
> overall supply but instead will just divert
> resources from existing building



Not necessarily - Our builders (as has been seen on other posts on AAM) are more than capable of importing additional manpower from outside the country when their is profitable work to be done.


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## Tommy (18 Jul 2003)

*Re: UBoat*

There is something smelly about a scheme where a select number of lucky people are awarded a massive financial benefit based on what are ultimately abritrary criteria while people who don't satisfy the criteria get absolutely nothing.

The comparison with 3rd level maintenance grants & medical cards means testing is appropriate only to a point. Your child would be a long time in college or your granny a long time getting free prescriptions before their maintenance grant or medical card would yield them €100K in benefits. 

The recent govt restrictions on new work permits will ensure that it is no longer possible in most cases to import foreign labour into the country to combat excessive domestic labour charges in certain industries. 

The problems that have bedevilled urban first-time buyers in the past decade, (our terrible planning system, the lack of a proper spatial strategy (gateways & hubs? - don't get me started...    ) and the lack of any practical committment to decentralisation) still remain unresolved. Therefore, excessive house prices look like a reality for many years to come.

Regardless of restrictions on selling the houses within 5 years, this scheme will make some people rich in the long-term, while no effort is made to sort out the issues that caused the problem in the first place.


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## rainyday (18 Jul 2003)

*Re: UBoat*



> Regardless of restrictions on selling the houses within 5 years,



I understood (though I didn't see anything definitive on this) that a longer term of restriction (e.g. 15-20 years) was planned - Anyone got any hard info on this?


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## Elcato (18 Jul 2003)

*Re: UBoat*

According to [broken link removed] the deal is %20.63 of sale price to be repaid for the first ten years and then %10.32 till twenty years. I presume these would be fairly close to the mark.


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## Tommy (18 Jul 2003)

*Re: UBoat*



> I understood (though I didn't see anything definitive on this) that a longer term of restriction (e.g. 15-20 years) was planned



If this is indeed the case, I stand corrected. If there is to be such a long restriction term, I don't know if purchasing would be in any way attractive to buyers. After all not many FTB's have much certainty as to where they will be working in 5 years time, let alone 20, and I personally couldn't see much point in an FTB piling equity into owning a property if they were only going to achieve full and unhindered freehold title after 15-20 years.

The figures quoted by Elcato sound, on the face of it, to be reasonable enough. Basically, a c€100K subsisdy would mean the Corpo owns 20% of your house until year 10 and 10% until year 20. After that its yours.

Unless we are talking here about houses valued at €500K+, there is still a major subsidy to the buyer.


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## darag (18 Jul 2003)

*Re: UBoat*

Hi rainyday.  Tommy actually expressed it better than I
did by pointing out that a scheme which offers massive
rewards to a select number of lucky people stinks.  This
is my fundamental objection to the scheme.  There is no
way you can realistically compare medical card provision
and third level grants which benefit a broad and large
segment of the population to a relatively small degree
with this proposal which will benefit a tiny segment of
the population to a massive degree.  The result cannot
only but be hugely unfair.

My other objection to the scheme is the economic and
financial hocus pocus used to justify the scheme.



> There is no proposal to restrict/eliminate the profit
> made by builders when building. The proposal is designed
> to eliminate the windfall, non-value-add profit made by
> developers/landowners. This is the major contributing
> ...



This is contradictory.  Why would any builder bid for
the tender if there is "non-value-add profit" (a new
term for me) to be had by developing and selling houses
themselves?

Come on, this is economic bunkum - the government will
be able to eliminate "non-value-add profit"?  I thought
these sort of ideas went out of fashion years ago.

You tell me what the difference is between this scheme
and an alternative where the government sells the land
at market value and hands out hundred grand grants to a
select few to buy on the open market?



> Again, this is not a good reason for not proceeding with
> the scheme, just because it might hurt the feelings of
> those who don't get a house. They will be no worse off
> than they are today.


How can you say that the people who fail to secure a
house through this scheme will be no worse off?  If the
government were to give Bertie ten million quid, should
everyone shut up because they are no worse off?  Do you
think government resources are infinite?  The government
is proposing to dispose of some very valuable assets
which are owned by everyone but give the benefits of the
disposal to a very tiny few.



> Indeed, they will probably be better off as there will
> 10,000 less buyers competing for the normal FTB houses,
> so this will inevitably result in price drops or
> levelling out.



Sure and this extra building capacity will appear out of
nowhere.


----------



## rainyday (19 Jul 2003)

*Re: UBoat*

Hi Darag

Just an aside - Did you know that you don't HAVE to hit return/enter at the end of each line when you post. That's why all your posts appear to be narrower than everyone else's. Just hit return/enter at the end of each paragraph if you want to use the full width of the screen to display your posts.



> a scheme which offers massive rewards to a select number of lucky people stinks.



Now you're just spinning. Maybe they ain't so lucky
- they will be on modest salaries
- they will not have already bought a house
- they will be restricted to a fairly small number of houses in a small number of locations

You could criticise almost EVERY Government spending scheme (e.g. medical cards to the elderly, drug refund scheme to the sick, mortgage tax relief to home owners, etc etc) as as similar scheme to offer 'rewards to a select number' - That doesn't make it wrong. Do you really expect the Govt to do NOTHING about our housing problem until they can provide a discounted house for EVERY prospective FTB?



> This is contradictory.



There is no contradiction. You seem to be mixing up 'building' & 'developing' (& I confess I mixed them up at one stage in my post. Building is about well, building houses. Developing is about land-grabbing (Liam Lawlor being a leading expert). Grab a piece of land from a farmer at agricultural prices, get it rezoned as residential by fair means or foul and take the profit from the huge *non-value-add* increase in the price of the land. Sometimes the builder & the developer are the same person, but sometimes they are not.



> Why would any builder bid for
> the tender if there is "non-value-add profit" (a new
> term for me) to be had by developing and selling houses
> themselves?



Two reasons - One, because there is a huge shortage of building land (resulting in a huge increase in house prices) & two, because they can make a simple, old-fashioned profit on their building work.



> You tell me what the difference is between this scheme
> and an alternative where the government sells the land
> at market value and hands out hundred grand grants to a
> select few to buy on the open market?



Because on the open market, most of the 100k will go straight into the hands of the developer to pay for the inflated price of land. This scheme cuts out the developer chunk of the price as the state is providing the land.



> Do you
> think government resources are infinite? The government
> is proposing to dispose of some very valuable assets
> which are owned by everyone but give the benefits of the
> disposal to a very tiny few.



Ok, you got me - but just on a technicality. In theory, you are correct. But in reality, what percentage of ALL Govt assets do you reckon these sites for 10k houses make up? Maybe 0.01% or possibly even 0.001%? So everyone in the State will by 0.01% worse off as a result of this scheme and 10k buyers (mostly couples I guess) will have their own homes - that sounds like a sensible redistribution of resources to solve a particular community problem to me.



> Sure and this extra building capacity will appear out of
> nowhere.



Building capacity isn't generally recognised as being the bottleneck that limits the supply of housing. Availability of land is the bottleneck. This scheme removes that bottleneck. As Kevin Costner said in Field of Dreams, "If you build, they [the brickies & sparks & chippies et al] will come".


----------



## GeoffreyOD (19 Jul 2003)

*shift focus back onto the stroke.*

Affordable housing scheme gives co. co. approx 20% stake in house for 10 years and thereafter stake decreases by 10% every year for the next 10 years.
It doesn't drop to 10% stake in year 11.

The affordable housing scheme is no massive bargain for those "lucky" enough to get a house through the scheme.
You get a very poorly specified house which may not suit your needs, you don't get to choose the type of neighbour you get and you may not get to choose the locality either.

There is no doubting that a young person on 35,000 not qualifying for the scheme while someone on 32,000 can is unfair but don't blame the person on 32,000 for being unfortunate enough to be poorly paid.  
The scheme is open to abuse as well - you'll find county council workers magically ending up in certain houses that you wouldn't think they'd be entitled to and you'll find self-employed people magically coming in under the 32,000 mark too.  

Paying 130,000 for a house in a competitive free unconstrained market is always going to be preferable to paying 130,000 for an affordable housing scheme house.

No, the real dosh is going to be made by those who build the houses and that is where the focus should be.
The land should have been sold and part of that money used to service the thousands of acres of land around Dublin already available to build on. 

This affordable housing solution is ideal for the developers, they make huge profit on the affordable houses and the insanity of the remainder of Dublin's property market is left untouched.
Thinking about basis economics, the people who get these houses weren't ever on the demand curve for the static house supply in the Dublin Area and supply in that same market is not affected by this initaitive.
The last thing Developers want is for the Government to actually fix the market and bring supply and demand into equilibrium at a lower price point.

Rainyday,  I know someone who recently built a modest house, site excluded for not much more than 50,000.
Compromise on room size, fixtures and fittings, sockets, heating, sanitary ware, plasterboard everywhere and you'll be amazed what you can build for small money - you'll get something resembling an affordable housing scheme
house.


----------



## rainyday (19 Jul 2003)

*Re: shift focus back onto the stroke.*



> you don't get to choose the type of neighbour you get


Just like any private housing estate then.



> you may not get to choose the locality either.


Just like many FTB's today, who are unable to get a house in the locality they currently live. Or to be more specific, they are unable to get a house in the province in which they currently live.



> you'll find county council workers magically ending up in certain houses that you wouldn't think they'd be entitled to


I presume that if you have any real evidence that any county council workers get special treatment under current systems that you report it to the authorities. The days when these kinds of abuses can run free are gone. I really don't believe that kind of stuff will still happen.




> No, the real dosh is going to be made by those who build the houses


That really depends on how the tender competition for building the houses is managed. 



> The land should have been sold and part of that money used to service the thousands of acres of land around Dublin already available to build on.


Servicing of land isn't really the bottleneck. Supply of land is the problem. The building land in Dublin is in the hands of the developers, who currently eek out just enough each year to keep them in helicoptors. Servicing the land will do nothing to help house prices.



> I know someone who recently built a modest house, site excluded for not much more than 50,000.


Great - tell him to put in a tender for the affordable houses and he's sure to win. That's assuming you are not referring to a 'direct labour' price (aka price for cash, aka tax evading tradesmen) which would explain 42% of the reduction from the normal price.


----------



## Tommy (20 Jul 2003)

*Re: shift focus back onto the stroke.*

Hi Rainyday

I think you are badly confused about the meaning of direct labour contracting. The term refers to an arrangement where a private housebuilder buys the raw material for their house from a merchant and engages seperately a blocklayer, carpenter, roofer, plumber etc to complete the various elements of the project. By doing so, the housebuilder bypasses the aaditional costs and logistical delays that are often experienced when projects are undertaken by building contractors.

Direct labour contracting is NOT the same as "price for cash" work where tax is evaded by the tradesman. 

Whatever about Geoffrey's 50k example, it is definitely  very feasible and commonplace in rural areas to build substantial 2000 sq ft houses for less than 100k euros plus site cost, by opting for direct labour, even where tradesmen are required to produce tax receipts.


----------



## rainyday (20 Jul 2003)

*Re: shift focus back onto the stroke.*

Hi Tommy - I'd confess to very limited experience in this area. In the one case with which I was directly involved, direct labour was synonomous with 'price for cash' and all that goes with that. I apologise to anyone whom I tarred inappropriately.

So Geoffrey, was the €50k price you mention a 'price for cash' scenario?


----------



## GeoffreyOD (20 Jul 2003)

*Price for cash work - No!*

Price for cash work - No!

I didn't say 50,000, I said not much more than 50,000 and that was a one-off development so there weren't the economies of scale that a large developer would enjoy.
I did say it was a modest house, not the normal 1800 to 2000 sq. ft house that most people build in the countryside.
The average 3 bed semi-d or terrace house that would be built under the affordable housing scheme would be around 1050sq. ft.  

I have enough evidence to lead me to believe that the way some of the houses in the affordable housing scheme are given out is slightly iffy but I'm not saying that the housing departments are corrupt.

Anyhow, who says that big developers don't pay 'cash' to those who provide services to them and who says all the big developers pay their tax liabilities.  I remember reading recently about the CRO trying to tighten up company law and in particular law with regard to directors of companies because of the same circle of property developers who kept setting up new businesses and then going out of business to set up under a new business name leaving unpaid debts, with Revenue being their largest creditor.


----------



## rainyday (20 Jul 2003)

*Re: Price for cash work - No!*



> I have enough evidence to lead me to believe that the way some of the houses in the affordable housing scheme are given out is slightly iffy



Well, it's not doing much good in your possession - you have a moral duty to present this evidence to the relevant authorities and/or politicians and/or journalists - whatever it takes to get this fixed.



> and who says all the big developers pay their tax liabilities.



Tax Clearance certification would be a standard requirement for anyone tendering for state contracts.


----------



## Tommy (20 Jul 2003)

*Re: Price for cash work - No!*

Hi Rainyday

The purpose of a tax clearance cert is to confirm that according to Revenue records, the taxpayer has no known outstanding tax liabilities. It does not confirm, nor does it purport to do so, that the taxpayer is complying in full with tax regulations.

I know nothing whatsoever about Geoffrey's suspicions of iffy goings-on in the administration of various housing schemes but surely you know as well as everyone else that anyone in this country trying to highlight any sort of injustice, maladministration or corruption on the part of the State or State agencies, will have the odds (and the formidable legal and financial resources of the State) heavily stacked against them before they even succeed in making themselves heard, let alone having their suspicions or evidence checked out properly. In that context, I feel your "moral duty" admonition to Geoffrey is unfair.

Certainly, afaik, Geoffrey's point about the CRO and the new "zero tolerance" company law regime is 100% correct.


----------



## rainyday (20 Jul 2003)

*Re: Price for cash work - No!*



> In that context, I feel your "moral duty" admonition to Geoffrey is unfair.



Hi Tommy - I'd accept that I may have been a bit harsh & no offence was intended. However, I was keen to highlight the general point that we all do have a moral duty as citizens to take action against corruption.

I get somewhat frustrated at the number of people who (during the course of the pub or lunch conversation) are "absolutely certain" that their local Guard/councillor/TD/priest/builder (take your pick) is corrupt, but are just as absolutely certain that they would not be prepared to take any action about this. The likely reason for their reluctance to act is that their 'absolute certainty' is actually nothing of the sort, and is nothing more than pub gossip being repeated and exaggerated each time the story gets told.

It's just a bit too easy to complain about the corruption without being prepared to do anything about it. If they are certain that the corruption is there, then they must have clear evidence that they can take to the authorities. if they don't have that clear evidence, then they don't really know that the corruption exists.


----------



## Tommy (21 Jul 2003)

*Re: Price for cash work - No!*

Hi Rainyday,

I agree 100% with you. 

If you substitute the word "corruption" in your post with "tax evasion" I'm sure you agree that this logic should also apply...?


----------



## rainyday (21 Jul 2003)

*Re: Price for cash work - No!*

Yep - absolutely!


----------



## darag (21 Jul 2003)

*Re: Price for cash work - No!*

Rainyday.

You may think it is only spinning to object to government
spending on the basis that it benefits a tiny number of people
to a huge degree.  The people who will get these houses are
"lucky", by any reasonable definition, relative to people on
two grand a year more than them.  They are lucky relative to
people on the same salary but who didn't have their name drawn
out a hat or who have already stretched themselves to buy a
house.  They are lucky relative to people on the waiting list
for a council house.

Because the system will work like a lottery, I object to
social spending where the receipt of a huge benefit can be
described as "occurring by chance or fortuitous" rather than
on the basis of suffering some sort of hardship.

I have to suspect that you are deliberately trying to
obfuscate things when you compare this scheme with medical
cards and drug refunds and other social spending.  By doing
so,  you seem to completely ignore the difference in magnitude
in basic human and social needs.  Do you really think owning
your own home instead of renting is some sort of basic social
right on par with having access to health care?

I wonder whether you would support a first time car buyers
grant of ten grand or so?  How about a ski holiday grant for
people with incomes under 25K?  The amount of money we are
talking about here is very significant; if they do actually
reach the 10,000 homes, I estimate then you are talking of
between 5 and 10 billion being handed out.  Can you really
claim that handing certain people a 100K should have priority
over other social or infrastructural spending?

All of the above points reflect a fundamental objection to the
principle of the scheme.  A secondary objection I have is to
the way the scheme will be executed.  This is less important
but still significant.  Builders will be the other big winners
from this.  Classic FF policy.

(Regarding your aside about formatting of posts.  I type my
posts using an editor I've used for years and paste the result
into the askaboutmoney form.  By default the editor
automatically breaks lines.)


----------



## rainyday (21 Jul 2003)

*Re: Price for cash work - No!*



> I have to suspect that you are deliberately trying to
> obfuscate things when you compare this scheme with medical
> cards and drug refunds and other social spending.


Not true - these examples were used for the sole purpose that it is the job of Govt to direct resources towards specific areas - you seemed to reject this principle in your earlier posts. 



> Do you really think owning
> your own home instead of renting is some sort of basic social
> right on par with having access to health care?


No, and I never said it was on a par with health care. However, housing for families is a basic social right, and like it or not, Irish people have a strong desire to own their homes, rather than rent. The ability to own a home has been ripped away from the current generation of FTB's by years of inaction & misdirected actions by Govt. 



> Can you really
> claim that handing certain people a 100K


No-one is being handed anything. People are being given the opportunity to participate in an affordable ownership scheme with built-in clawbacks to ensure that this benefit is repaid if they sell within a 20 year period.



> if they do actually
> reach the 10,000 homes, I estimate then you are talking of
> between 5 and 10 billion being handed out.


Check your sums - Even if I accept the idea of money being 'handed out' (which I don't), 5 billion for 10,000 homes gives a benefit of 500k per home in my book. Where did you get this from?



> Can you really
> claim that handing certain people a 100K should have priority
> over other social or infrastructural spending?



I do believe that at this point in time, use of this land in this way to let young couples get their first step on the property ladder is preferable to selling off the land at commercial prices and building another motorway.



> A secondary objection I have is to
> the way the scheme will be executed. This is less important
> but still significant. Builders will be the other big winners


There is a risk here, granted - but it is a manageable risk. If an open, competitive, international tendering process is used, no-one is going to cream it on these contracts. Indeed, if Geoffrey's friend submits his bid for 50k per house, he's going to leave all the other builders standing.


Just to be clear, Darag, it might help if you outlined what action (if any) you believe the Govt should be taking to resolve the current difficulties for FTB's?

Does anyone know if the clawbacks in this scheme also apply to renters, i.e. what happens if a purchaser decides to rent out their house after 1 year or 5 years?

Regards - RainyDay


----------



## GeoffreyOD (21 Jul 2003)

*100,000 loss, not gain*

Darag you are of the opinion that people qualifying for this scheme benefit to the tune of 100,000.  
The loss to the economy may be closer to the 100,000 you are talking about but the individuals involved do not benefit to that extent as they are not getting a house that is worth 100,000 more than they paid for them.

Houses sold in some of the developments sold for 130,000 have been given a market value of around 175,000 which is used to determine how much of a stake the Co. Co. has in the house.

So they are not getting a 100,000 windfall.
They are getting a house with strings attached and they are not getting a house that they'd normally want to buy.

If there is a loss to the economy of 100,000 for each house and the recipient isn't recieving the full amount then the remainder is attributable to inefficiency in the system(as is the case with any interventionist policy) and profit taking by those providing the house.

As I have said before the Government have purposely tried not to make the real market work.
Affordable housing has a role to play in housing policy along with council housing and free market housing but it's role has been overstated by the government because it suits them not to tackle the housing market.


----------



## GeoffreyOD (21 Jul 2003)

*Subletting*

Is not permitted


----------



## darag (21 Jul 2003)

*Re: Price for cash work - No!*

Hi Rainyday.  You got me on the figures - I did the sum in my
head and yes the cost looks like being of the order of 1
billion.  This is still a very significant amount of money by
any standards and I think it is fair question the
justifications for spending such a sum of money ostensibly for
social purposes.

Maybe we have some fundamental differences regarding
government social spending.  I have never objected to
government spending for welfare purposes.  However I challenge
you to argue that owning rather renting your home is a basic
welfare entitlement.  You throw in a non-relevant claim
("housing for families is a social right") which simply
confuses or obfuscates the issue.  As a matter of fact I agree
that having access to a roof over your head is a basic social
right but I don't know what this has to do with people who
want to own rather than rent.

I assume that you, like me, would not agree with the
government giving out a first time new car buyers grant
regardless of whether Irish people strongly desired owning
their own cars.  I don't see this FTB scheme as being much
different.

So my first objection is that owning a house rather than
renting is not a basic social right.  Secondly in principle
the criteria for receiving welfare benefits are usually set
by some measure of hardship.  This scheme as constituted
can only work as a lottery.



> Just to be clear, Darag, it might help if you outlined what
> action (if any) you believe the Govt should be taking to
> resolve the current difficulties for FTB's?


I honestly don't think discussing other possible policies would
make things clearer.  The core of my argument is simple and
clear: welfare spending should be used to address real social
needs and all such benefits should be distributed fairly.  This
scheme goes against both of these principles.

I actually have other objections but these are probably the
fundamental ones I feel most strongly about.


----------



## GeoffreyOD (21 Jul 2003)

*affordable housing vs council housing*

The point of affordable house was that it was preferable to county council housing.
With affordable housing the owner buys a stake in their home and is reponsible for it's maintainance which most would think is preferable to the state providing housing for everyone.
A real social need is shelter and Affordable housing is supposedly a more preferable cost effective means of providing shelter than county council housing.
Naturally buying your own home is preferable to affordable housing as a means of gaining long term shelter but this government sees nothing wrong with house prices in the open market being in excess of 250,000 in the Dublin Area.


----------



## rainyday (21 Jul 2003)

*Re: Price for cash work - No!*



> The core of my argument is simple and
> clear: welfare spending should be used to address real social
> needs and all such benefits should be distributed fairly.


Hi Darag - Clearly we do disagree on the principle involved. But I'm interested in your view how the other benefits should be 'fairly distributed' - If you think that use of income as a criteria for this benefit is unfair, wouldn't it be equally unfair for other benefits, e.g. social housing etc?


----------



## Aha (23 Jul 2003)

*Property - a dirty word*

I have now come to my own conclusion - property is seriously languishing, and I (my opinion) would not touch it with a 50 foot pole .. Rents are falling like jobs and older houses are being left idle as tenants realise they'll get a better deal elsewhere... my friends, property will become a dirty word soon, as a buy-to-let friend says 'buy-to-fret', he sold his buy 2 let 6 months after buying, could not get ANY tenants to fill it ! He made a loss but he reckons alot bigger drop are coming .. I believe Prices _will_ drop early 2004 by 10%+


----------



## MugsGame (23 Jul 2003)

*Re: Price for cash work - No!*

_rainyday_ said


> In the one case with which I was directly involved, direct labour was synonomous with 'price for cash' and all that goes with that. I apologise to anyone whom I tarred inappropriately.



I assume therefore that you presented any evidence of tax evasion to the relevant authorities? Was any action taken as a result?


----------



## rainyday (23 Jul 2003)

*Re: Price for cash work - No!*



> I assume therefore that you presented any evidence of tax evasion to the relevant authorities?


Yes



> Was any action taken as a result?


Don't know - never heard anything back from Revenue


----------



## Tommy (23 Jul 2003)

*Re: Price for cash work - No!*

For confidentiality reasons, it is Revenue policy not to provide feedback on third parties' tax affairs to a complainant or any other person. However if the person involved ends up paying a settlement to the Revenue in excess of €12,700 you can expect to see their name and the settlement details published in due course.


----------



## BuyahouseOn20k (23 Jul 2003)

*o*

As a person struggling to get a house on a low income, just wondering if all those people who are pretending to be owner occupiers and are renting out their whole house and not living there, possibly as rent a room.. should be they reported to Revenue ?


----------



## Elcato (23 Jul 2003)

*Re: o*

Hi BuyahouseOn20k - If you are saying you have evidence of this then of course they should be reported, but don't go on heresay.


----------



## Greg (24 Jul 2003)

*How do the CoCo know?*

If someone buys one of these affordable houses and then rents it out at market rates they will surely make a large profit each month as the mortgage repayment would be relatively small. How does the coco stop this happening?


----------



## Elcato (24 Jul 2003)

*Re: How do the CoCo know?*

You must be resident in it. It can't be sub-let as mentioned above. You also have to attend some community meetings which are organised by the council. If you're asking how they enforce this I guess you have to sign something and also your neighbours would not be long smelling a rat if you were not living there.


----------



## Greg (24 Jul 2003)

*Re: How do the CoCo know?*

Whose to say the person isnt availing of the rent a room scheme. From what I understand of the affordbale housing scheme. You buy the house off the county council with a mortgage from them. The house is therefore your private property and therefore you could do what you like with it. People migth live in it for 2-3 years but then rent it out and move to another house rather than wait around 20 years to move. I can't see how the co co can stop people from subletting the property.


----------



## Elcato (24 Jul 2003)

*Re: How do the CoCo know?*

As I've stated there are rules set out by the council which dont allow you 'do what you like' but again I state if you are asking how they enforce these they will rely on your neighbours to report any activity which may breach these rules.


----------



## darag (24 Jul 2003)

*Re: How do the CoCo know?*

Hi rainyday.  In response to:


> Hi Darag - Clearly we do disagree on the principle involved. But I'm
> interested in your view how the other benefits should be 'fairly
> distributed' - If you think that use of income as a criteria for this
> benefit is unfair, wouldn't it be equally unfair for other benefits,
> e.g. social housing etc?



First of all I'm surprised that you believe that
government social spending should be directed toward
non-welfare (in it's literal sense) goals but there you
go.  What you seem to view in this case as "free money"
from the government,  I view as money that is taken from
all of society and given to a rather arbitrary small
section of society who are not suffering any real
hardship.

Regarding fairness, I don't at all object to using
income a criteria for distributing benefits.  I think
Tommy made the point earlier


> There is something smelly about a scheme where a select
> number of lucky people are awarded a massive financial
> benefit based on what are ultimately abritrary criteria
> while people who don't satisfy the criteria get
> ...


I also made the point:


> Because the system will work like a lottery, I object to
> social spending where the receipt of a huge benefit can
> be described as "occurring by chance or fortuitous"
> rather than on the basis of suffering some sort of
> hardship.


The grammar might be a bit dodgy - I copied a definition
of "lucky" from a dictionary - but the unfairness of
awarding benefits by lottery is obvious to me anyway.

I must say 'though that this scheme is a masterstroke of
Irish politics.  The financial aspects are opaque or
deliberately obfuscated ("sure it's only unused land" -
it's not like it's costing us anything).  It manages to
appeal to lefties while at the same time it is diverting
government money into the pockets of big builders.
There has been no economic or financial analysis of the
scheme; no one has even asked: where will the extra
building capacity come from?  What will happen the
regular FTB market both secondary and the new builds?
What will be the effect of forcing between 10,000 and
20,000 people to live in the same place for upto 15
years in terms of economics (worker mobility) and
general social and personal welfare?  Finally it makes a
good sound bite and the lads get on the nine o'clock
news trumpeting what they're doing for the poor FTBs.
The largely middle class electorate think appreciably of
their kids starting work on salaries of 24K trying to
buy a house and so you also get the supportive callers
to Marion Finucan.


----------



## rainyday (24 Jul 2003)

*Re: How do the CoCo know?*

Hi Greg



> How does the coco stop this happening?



It won’t be too hard really – monitoring of ‘house to let’ ads, monitoring by Revenue of claims for ‘rent a room’ or mortgage interest relief benefits, getting reports from neighbours, monitoring of electoral register etc.

Hi Darag


> I'm surprised that you believe that
> government social spending should be directed toward
> non-welfare (in it's literal sense) goals but there you
> go.


Forgive my ignorance, but what exactly do you mean by non-welfare?

I’d agree that the lottery system isn’t ideal, but what’s the alternative? Should they lower the qualifying salary criteria to whatever level is necessary to limit the number of applicants the the number of houses available – would that really be any better? You can it is unfair, but it is equally unfair to everybody, which actually makes it fair. 



> it is diverting
> government money into the pockets of big builders


This totally depends on how the tendering for the contract to build the houses is managed. If it is done properly, there will be no profiteering or windfall for the builders. You can’t rule out a scheme like this just because there is a potential for abuse.



> What will be the effect of forcing between 10,000 and
> 20,000 people to live in the same place for upto 15
> years in terms of economics (worker mobility) and
> general social and personal welfare?


No-one is forced to live anywhere. They are free to move at anytime – they just have to repay the benefit that they got. They are no more ‘forced to live in the same place’ than any FTB who buys their first property and find it difficult to trade-up.



> the lads get on the nine o'clock
> news trumpeting what they're doing for the poor FTBs.
> The largely middle class electorate think appreciably of
> their kids starting work on salaries of 24K trying to
> ...


You ain’t so bad at the soundbites yourself!


----------



## darag (24 Jul 2003)

*Re: How do the CoCo know?*

Hi rainyday. By "non-welfare", I mean not addressing
basic social needs.  Maybe along the lines of those 
outlined by the UN; i.e. education, health, etc.  It 
may not be black and white, but owning "real estate" 
is certainly not one of them.


----------



## rainyday (24 Jul 2003)

*Re: How do the CoCo know?*

Hi Darag - Yep, I get you now, and I would generally agree with increased spending on health & education. We disagree in relation to spending on housing in this particular case.


----------



## llo (24 Jul 2003)

*plo*

Just like benchmarking, the gov'ment will end up paying top dollar at the peak, then house prices fall and we wonder where all the money went !


----------



## daltonr (29 Jul 2003)

*Re: plo*

Why don't we have a shared equity scheme?

Allow FTBs to offer the state the chance to buy a portion of their new house.  So if I can only raise 100K and my potential new house costs 200K, then allow the state the chance to buy 50%.

If I sell up and move on the state collects half of the growth.
Money raised could be ring fenced for housing for people who have no chance of owning their own home.

The scheme could also be limited to FTBs buying a property to live in.  If at any time you want to rent the property you have to buy out the states portion.

-Rd


----------



## State (30 Jul 2003)

*Shared ownership*

The Shared Ownership scheme already works in a similar fashion


----------



## daltonr (31 Jul 2003)

*Re: Shared ownership*

So why doesn't the state sell this land for the going market rates, with a condition that it be developed within a specific time frame, and then allow the purchasers to engage in shared ownership separately if they want to.

More money for the government, rather than effectively giving away a state asset.

-Rd


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## mairead30 (1 Aug 2003)

*homes*

The UK is building 120,000 affordable new homes around London to held the people who cannot buy their own homes.


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