Surely the solution to house prices is to increase the supply of houses?

[Delboy]

Surely the sensible thing to do to get housing 'going' in future if needed, is to lower the cost of housing i.e. lower the Govts 40% tax take on new builds or restrict the price of building land.
Rather than ease on lending so to allow those struggling to raise a deposit to get a house.

Don't chase prices...we know what that leads to

 

[Steven Barrett]

That's not within the Central Bank's remit, it's a government decision. The CB see the Dublin property market overheating and seeing as they can't increase interest rates, they are increasing deposits.

It will be interesting to see if the government do anything on Tuesday to get building happening again. Where I live, there is acres of land with planning permission that is ready to go. All the land was bought at Celtic Tiger prices though, so I can't see the houses being cheap when they are built eventually.

Steven
www.bluewaterfp.ie

 

[Brendan Burgess]

This is a very important point, and we need joined up thinking here from everyone involved.

It makes sense from the Central Bank's prudential point of view, to limit LTVs to 80%.

But if this causes prices to fall, then there will be fewer houses built. We have a shortage of houses, so if there are fewer houses, prices and rents will rise.

 

[Peanuts]

Where I live, there is acres of land with planning permission that is ready to go. All the land was bought at Celtic Tiger prices though, so I can't see the houses being cheap when they are built eventually.

Steven
www.bluewaterfp.ie

That's the essence of the problem at the moment IMO. Even with the shortage of houses in Dublin and the increasing prices it's still not worth it for a developer who bought land at celtic prices to develop it. Surely though Nama must have land banks that they have taken over that would be suitable for development!

 

[Jim2007]

Surely the sensible thing to do to get housing 'going' in future if needed, is to lower the cost of housing i.e. lower the Govts 40% tax take on new builds or restrict the price of building land.
Rather than ease on lending so to allow those struggling to raise a deposit to get a house.

Don't chase prices...we know what that leads to

The sensible thing to do would be to try and have a proper housing policy, one that encourage the provision adequate accommodation (not houses necessarily) while recognizing the fact that the majority of people will not be able to own their own home nor should they! And of course such a policy would also need to address the environmental issues.

Now I don't know of any country out there that has succeeded in this, but there are certainly better options than our current one, which requires the average citizen to take on a heavy financial in order to provide living accommodation for their family.

 

[cremeegg]

Now I don't know of any country out there that has succeeded in this, but there are certainly better options than our current one, which requires the average citizen to take on a heavy financial in order to provide living accommodation for their family.

To provide adequate accommodation for a family requires significant primary resources of land, materials, and labour and no less important a significant additional resource in terms of finance.

I think a lot of our problems have arisen from people failing to recognise that this of necessity involves a heavy financial burden.

Neither markets; cheap loans, nor government policy; building social housing or market manipulation, can change this basic fact no matter how much we may wish it.

 

[Delboy]

Well when 40% of the cost of a new build goes to the Govt in 1 form of taxes or another (and that figure was calculated before the new rules/regulations that came into force in January of this year), then yes, the cost of new housing can be substantially reduced.
And then there's the cost of development land in this country!

 

[cremeegg]

Well when 40% of the cost of a new build goes to the Govt in 1 form of taxes or another (and that figure was calculated before the new rules/regulations that came into force in January of this year), then yes, the cost of new housing can be substantially reduced.
And then there's the cost of development land in this country!

40% is about the EU average tax take as a percentage of GDP so 40% of the cost of a new build going in tax is not unusual, anything much below that level would be in effect a subsidy in comparison with other types of economic activity.

The Nevin Institute says "Government revenue in the Republic of Ireland was 35.9% of GDP in 2013."

http://www.nerinstitute.net/blog/2014/08/12/the-revenue-gap/

I cannot find any other source for recent years.