Brendan Burgess
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We could achieve that by taxing interest. So if the bank charges you 3%, you must also pay 1.5% in tax. That would be ridiculous.
Mortgages in Ireland should be non-recourse
- Thread starter BIG-notorious
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We could achieve that by taxing interest. So if the bank charges you 3%, you must also pay 1.5% in tax. That would be ridiculous.
Point taken but I think developers should spend less time whinging and lobbying and more time looking at their own efficiencies.
Land is expensive because credit is cheap and the world is awash with money. If we reduced taxes on building we'd just make land more expensive. Prices aren't being set by normal supply and demand within retail market.
That wouldn't spread the risk so yes, it would be ridiculous.
BIG-notorious
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Land is expensive because from 1963 onwards planning permission was required to build any non-exempt development. Supply of land for development was annihilated without a corresponding reduction in demand resulting in massive price increases.
That's lesson 1 of any foundation level economics course.
Essentially you'd be creating house price deflation by deliberately provoking housing finance inflation.
This would benefit people who are already wealthy and can buy houses without requiring a mortage.
But it wouldn't benefit people who are already wealthly mainly because they own a house; it would make them less wealthy by devaluing their house. It would only benefit wealthy people who don't own a house, and wealthy people who have substantial assets apart from houses.
And, of course, it wouldn't benefit people who want to buy a house but require a mortgage to do so. It doesn't make home ownership any more affordable for them — the opposite, in fact.
All in all, I can't see this being a wildly popular proposal.
Well if you want to selectively quote my post then that's correct. What I said was "In my opinion the advantage of a system where all mortgages were non-recourse is that credit would be more expensive and so property would be cheaper. That falls down in the international market we are now in where the price is not set by retail (private) buyers but by massive amounts of international capital looking for a home in a low bond yield environment."
I'm a fan of taxing wealth more and taxing income less. That would, to some extent, mitigate the problem of wealth, especially newly created wealth being concentrated in the hands of capital rather than labour. That's why house prices have increased relative to labour, though they haven't increased relative to other capital values. That said there's no easy fix to any of this.
The big mistake people are making in assuming that prices are being set by retail demand. It's a mix of a lack of supply (the main factor), lots of international capital (and domestic capital) chasing a return, interest rates, wages, and supply side costs. The State could do a fair bit around supply side costs by not being so incompetent but that's the way the State sector works across the board in this country.
Thank goodness they did. There's more than enough one-off housing and other rubbish blighting the countryside.
The solution to bad planning laws and grossly inefficient State bodies is not no planning laws. The solution is good planning laws and efficient State bodies.
So many of our problems, from housing to healthcare, go back to the incompetence and inefficiency of our politicians and, more importantly, our State bodies and employees.
Purple — can you explain to me how the . . .
. . . are driving up Irish house prices? I think I'm missing something here.
There is a massive amount of international capital looking for a home. It has driven up commodities like lumber and steel, it has driven up the stock markets and it is driving up real estate values all across the developed world. Internationally the financial crash simultaneously turned off the supply of housing and then flooded the world with cash so we created more competition for existing stocks of housing while decreasing the real value of the labour looking to buy it.
We already had an aging population and a large reduction in average household sizes (as opposed to house sizes) but the financial crisis, and then Covid money printing, was fuel on an already burning fire.
We already had an aging population and a large reduction in average household sizes (as opposed to house sizes) but the financial crisis, and then Covid money printing, was fuel on an already burning fire.
I'm still not seeing how international capital is driving up Irish house prices. Is international capital coming to Ireland and bidding against Irish residents for homes? Or are you suggesting that Irish residents are finding it easier and easier to get larger and larger mortgages because international capitalists find the Irish homeloan market a lucrative one?
Yeah, a little more rape and murder is exactly what we need around here!!!
Capital that builds homes isn't, but rent controls have made that less attractive.
Capital that buys existing homes does. Some info here.
The State is the main actor bidding against first time buyers but the market is also being inflated by money from outside Ireland. The same thing is happening all across Europe.
I don't think so. There's remarkably little competition within the mortgage market. The fact that it's almost impossible to repossess a home in Ireland is probably a factor in that.