Government crap

So house prices are falling, and continue to fall, and the Government thinks that they will aid first-time buyers by propping up the market using taxpayers money? How exactly will that work?

Leave the fucking property market alone Cowen. The best way to make houses more affordable is to leave the market do its work.

That is unless Fianna Fail is in the pockets of developers. Or is at the very least their best friend.

Instead, there are very good reasons to stay out of the property market. Morgan Kelly has a good piece in the IT, and uses the same 50% peak to trough figure Jim Power mentioned in July. We seem to finally be getting out of the “But Ireland is different” mentality.

For an instruction on what exactly an asset bubble is, and where this 50% figure might be coming from, take a look at Chris Martenson’s excellent explanation.

Incidentally, I took some photos of empty houses in completed estates around Carrigtwohill yesterday:

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Similar houses to this (being sold second hand) are up for sale at a staggering €449,000. Can you say way over-priced?

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You have to ask: Are these 13 houses combined worth around €5.9m? I don’t think they are. I think these 4 bed detached houses are worth at least half that.

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More in the Flickr set
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6 thoughts on “Government crap”

  1. Is it any surprise that the only people calling for intervention in the housing market are the bankers and builders and their political poodles.

    I don’t hear too many ordinary people fretting over not getting a mortgage or agonising about buying a house.

    The ordinary punter know full well that buying a house now would be daft.

    The government is in a quandry because even if they intervene there is no way in hell the could persuade any sensible person to buy a house now.

    My guess is that the government will start buying “social housing”. They are the only ones stupid enough to buy at the moment. If they do that they should be crucified.

  2. Morgan Kelly also wrote of a decade-long recession, citing the experiences of Germany. I am not sure that the comparison is apt, given that their problems stemmed from a political decision to unify West and East Germany again. Nevertheless, I liked the plain speaking of his arguments.

    Indeed, until we all put our hands up and admit that the economic expansion of the past five or so years has been primarily fuelled by a disproportionate and unsustainable surge in property prices, we seem destined to be trapped in stagnant economic waters.

    The likelihood is that a new government is needed to achieve any form of pain-followed-by-recovery approach to getting our economic house back in order. The current one is hopelessly linked to the problems of the past and it will be very difficult for them politically to do an about-face and implement the kind of “wipe the slate clean” policies that are need now. Above all, this includes a policy of letting the property market come back down to earth. Nothing else is realistic now that the era of cheap credit and loose lending policies is over.

    In a way, my point is aspirational, as so many people have invested in property when the market was nearing its peak and I still think that they are taking the “three monkeys approach” to the realities of where we are now.

    The only glimmer of hope that I see is that the European economy is also slowing and energy-related commodity prices are just starting to stabilise, if not fall. A possible (wishful?) cut of 50 basis points from the base rate by the ECB sometime over the next 12 months would help. However. even if it did come. it will only help if we are honest with ourselves about the last few years and that those days are now gone.

  3. Agree with you there. The property circus could yet be the rock that this country perishes on. Overpriced houses = need for higher wages = problems with competitiveness. Overpriced houses in Dublin = people buying houses 30 or 40 miles away = traffic jams on the M50.

    I don’t know how the hell anyone thought that we could build increasingly expensive houses forever and sell them to each other. We have more than enough houses in this country. How many more do we need?

    If the government keeps its nose out of the property market, it will find its own level. The market’s been correcting itself. Of course, this doesn’t help the unfortunates who now find themselves in negative equity but overall it’s in nobody’s interest to have to pay such stupid money just to put a roof over their head.

    My only hope is that even if the government is stupid enough to try and get the market going again, that the people won’t be so easily fooled. The halt in the housing market has made many people stop and think about how crazy things have got and that prices can’t rise forever. Perhaps the change in sentiment will keep the correction going, just the same as sentiment sent prices apeshit in the first place.

  4. It’s lunacy.

    I’m a first time buyer living in Cork. I earn a decent wage of E44k. I have mortgage approval for a 92% loan of €220,000.

    Instead of leaving perfectly good homes empty, why not cut the price of one of the three bed townhouses so I can have a home of my own?

  5. You just need to wait a while longer. The developers are holding onto their property as long as they can. That’s a situation that the banks control as they don’t forcefully call in their loands. However like any pack of cards built on weak foundations once a couple of cards are removed (the banks come under renewed pressure, a couple of developers flog developments for cheap) the developers will be forced to revalue quicker.

  6. I must admit to be a strange kind of new house owner in that I bought in the last two years but I sold to buy and also bought for less than I sold for. In a sense I downsized from a property I had that I couldn’t live in (while not live and get work near) so I bought closer to where I was. I bought on the basis that I could live with the price I paid dropping 10/15% and I’m ok with how things are at present.

    What has to happen is for some clearing out of debt from the banks’ books by developers folding. It won’t be pretty but until that happens then the debt is floating around the financial system like gunk clogging a drain. I would also like to see the banks firing people, yes firing people (senior people with no golden handshakes) for making the decision to get involved in this glorified pass the ticking parcel of the sub-prime packaging into ‘financial instruments’. They got paid large sums for their supposed smarts and the buck has to come to rest at their desks.

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