# The government's real priority in housing is to keep house prices high



## tomdublin (20 May 2021)

The predominant take in the media  has long been that the government's priority is to increase supply of housing but that, almost uniquely among all governments in the developed world, it is too incompetent to do so.  This interpretation doesn't make sense to me.  

 Almost all of what has been happening over the past ten years makes sense if one presumes that the government's foremost priority is not to increase supply but instead to keep house prices high.  

That's what the battalion of vested interests that has captured housing policy (banks, developers, estate agents, landlords, investment funds, etc) is pushing for.  

It explains why even when public pressure is making the government act against those groups it does so half-heartedly: 
hence regulations on Airbnb landlords that were seemingly designed to be unenforceable; 
hence no effective measures to tackle rampant dereliction; 
hence the continued construction of low density semi-detached houses in Dublin's inner suburbs where hundreds of medium-rise apartment blocks would be needed to make a meaningful impact on supply;
 hence the lack of enforcement of rent caps in rent pressure zones; 
hence the lack of measures to protect apartments from bulk-buying by investment funds;
 hence the bizarre shared equity scheme which developers sold to ministers as a way of increasing supply without affecting prices; 
hence no tax penalties on vacant properties, etc etc.  

The government should at least be upfront about its real priority (extremely high house prices at all cost), thereby enabling a public debate as to whether it is worth sacrificing a generation.


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## Brendan Burgess (20 May 2021)

Hi tom, 

Don't look for a conspiracy when simple lack of competence is a much more obvious explanation.

You raise an interesting point. 

The government's objective should be to bring down the cost of housing.  A lot of its actions have the opposite effect, although that it not the intention.

But they should be clear that the objective is to increase the supply and bring down the cost.  If they had clear objectives, their actions would be more effective.

Brendan


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## Purple (20 May 2021)

Brendan Burgess said:


> Don't look for a conspiracy when simple lack of competence is a much more obvious explanation.


_Never ascribe to malice that which is adequately explained by incompetence - _Robert A. Heinlein


tomdublin said:


> The predominant take in the media has long been that the government's priority is to increase supply of housing but that, almost uniquely among all governments in the developed world, it is too incompetent to do so. This interpretation doesn't make sense to me.


The first priority of any government is to stay in power and to win the next election. Younger people getting priced out of the housing market is a phenomenon in much of the developed world. It is part of the global shift of wealth from labour to capital.
Almost uniquely amongst developed countries we have very high taxes on labour (wealth creation) and very low taxes on capital (wealth retention), thus magnifying the impact of that shift.

We also have a systemically and structurally incompetent Civil Service (they can't write legislation, they can't write regulations and they can't oversee the ones that they do have) and a construction sector which is grossly inefficient and is more interested in lobbying than getting better at its job.

If the State bodies were fit for purpose then we could try to open up the market to international competition but they aren't so we can't. We have companies factory building homes in Ireland and exporting them because they can't sell them in the Irish market.

Politicians have to work within the boundaries of that incompetence, their own limitations, the populism of the media and opposition and the knowledge that the construction sector can't do their jobs properly either.

I'd love it if corruption was the problem as it's much easier to fix than all those layers of incompetence.


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## NoRegretsCoyote (20 May 2021)

Brendan Burgess said:


> The government's objective should be to bring down the cost of housing. A lot of its actions have the opposite effect, although that it not the intention.


Prices of building and existing housing are in a sense arbitrary. You don't want boom and bust of course, but I think the policy tools are in place to make sure this doesn't happen again (Central Bank lending limits).

I think the policy should just be to build more dwellings and stop trying to micro-manage tenure status.

I say "dwellings", not "houses", as apartments are really what is needed as the population of families isn't growing while the population of people living alone is going to grow a lot.


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## skrooge (20 May 2021)

Politics is a numbers game. 75% of population own their homes. 

While the government may want to help the remaining 25% they're not going to do anything that effects their electoral base. They want to support the wealth of the core electorate. Including a sizable grey vote. 

At the same time they want to give the remaining 25% the hope that they might also become property owners one day. 

Hence why you end up with inflationary measures thinly veiled as affordability measures.


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## Brendan Burgess (20 May 2021)

Purple said:


> We also have a systemically and structurally incompetent Civil Service



Hi Purple

I think that the Ministers are more to blame than the civil servants. They have tried to curb some of the Ministers' mad schemes over the years with varying degrees of success. 

If the Minister says that he wants reckless lending and wants to call it "shared equity" , then the civil servants have to implement it. They probably advised against it but that is all that they can do.

Brendan


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## Purple (20 May 2021)

Brendan Burgess said:


> Hi Purple
> 
> I think that the Ministers are more to blame than the civil servants. They have tried to curb some of the Ministers' mad schemes over the years with varying degrees of success.
> 
> ...


No Arguments there but when factory built house manufacturers in Ireland can sell their homes in the USA but can't sell them here because our regulations don't suit the product there's more to this than political incompetence.


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## PGF2016 (20 May 2021)

skrooge said:


> Politics is a numbers game. 75% of population own their homes.
> 
> While the government may want to help the remaining 25% they're not going to do anything that effects their electoral base. They want to support the wealth of the core electorate. Including a sizable grey vote.
> 
> ...


Why are that 75% of the population so keen on house price increases? What percentage are landlords? Do they not have relatives / friends who are unable to purchase due to high prices and limited availability? An increase is only really beneficial come sale time and how often do most people sell or downsize? Once or twice in a lifetime on average? And if you're trading up then the price of the new house will have risen also. 

I see a house as a home, as shelter. And later in life if/when we downsize it will be to have a smaller place that's easier to manage and not to make a killing on the sale of an investment. 

I guess I can't get my head around home owners voting for FF / FG to keep house prices rising.


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## Purple (20 May 2021)

PGF2016 said:


> I guess I can't get my head around home owners voting for FF / FG to keep house prices rising.


I certainly don't vote for them for that reason. I vote for them to keep the alternative out.

Why do people like high house prices? Because people like to feel rich. They don't see the obvious correlation  between their house increasing in value and their children and friends not being able to buy a house. They want house prices to drop but they don't want to be inconveniences in any way by it. People are selfish and myopic.


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## Early Riser (20 May 2021)

PGF2016 said:


> I guess I can't get my head around home owners voting for FF / FG to keep house prices rising.


 
I am not sure they are voting to keep house prices rising. They are voting for a staus quo that results in rising house prices, eg, no develeopment in our locality, no density, no redistribution of the tax burden from earned income to property, no CGT on the "family home".


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## Purple (20 May 2021)

Early Riser said:


> I am not sure they are voting to keep house prices rising. They are voting for a staus quo that results in rising house prices, eg, no develeopment in our locality, no density, no redistribution of the tax burden from earned income to property, no CGT on the "family home".


Exactly. They are doing what the people want.
It's just that the people don't want the inevitable outcomes that result from the government doing what they want.


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## Shirazman (20 May 2021)

Purple said:


> Exactly. They are doing what the people want.
> It's just that the people don't want the inevitable outcomes that result from the government doing what they want.





PGF2016 said:


> I guess I can't get my head around home owners voting for FF / FG to keep house prices rising.



Neither of my sprogs (both in their 30s) wants to own a house, as they much prefer the freeedom of renting.  Nor do they want to foot the bill for the insane amounts of social housing being advocated by the parties of the left - because they realise that, ultimately, they'll be the ones stuck with funding such populist policies.    Hence, they both find themselves (albeit reluctantly) voting for the same party as their parents do!


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## Purple (20 May 2021)

Shirazman said:


> Neither of my sprogs (both in their 30s) wants to own a house, as they much prefer the freeedom of renting.  Nor do they want to foot the bill for the insane amounts of social housing being advocated by the parties of the left - because they realise that, ultimately, they'll be the ones stuck with funding such populist policies.    Hence, they both find themselves (albeit reluctantly) voting for the same party as their parents do!


Yep, that's about it. It comes down to damage limitation and, hopefully, the realisation that the permanent government are what really matters.


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## tomdublin (20 May 2021)

Purple said:


> Younger people getting priced out of the housing market is a phenomenon in much of the developed world.


As far as Continental Europe is concerned this is true as regards buying property but not as regards renting.  Even in very high-priced cities young low-paid workers can afford to rent a small apartment on their own due to a mix of rent-control and aggressive supply-side policies.  Dublin-sized cities such as Lyon, Milan or Dusseldorf have thousands of medium-rise apartment blocks that provide hygienic, central and affordable accommodation for the masses.  Young full-time workers being forced to emigrate or spend the rest of their lives sharing dingy houses with strangers is a specifically Irish phenomenon (and also a British one where the government has long been pursuing similar policies).


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## Early Riser (20 May 2021)

tomdublin said:


> As far as Continental Europe is concerned this is true as regards buying property but not as regards renting



I do not have direct experience but there seem to be considerable parallels with Sweden :
https://borgenproject.org/homelessness-in-sweden/





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And rent controls created its own problems: 
https://www.spglobal.com/marketintelligence/en/news-insights/trending/Bf9u6cZrFvmWSlICy1pArQ2


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