I’m confused and I suspect many people are. We have a property market. We have an economy.
Up until 2006, property prices in Ireland were largely on an upward trajectory. So upward, in fact, that a lot of people could not actually afford to buy property. Anecdotally, there’s a stat floating around that said 40% of new builds in Ireland in 2006 went to investors. Meanwhile, as prices rose, first time buyers were left increasingly out of the market. To address this, banks introduced new lending criteria based on disposable income rather than salary multiples.They also upped the LTV and at the end of 2006, first time buyers were still increasingly unable to buy property.
As the chorus of voices pointing out that it was mathematically impossible for property to continue increasing in value exponentially grew louder, the counter claims suggested that we’d slow down and bump along in tune with inflation. Now that we have reached 2010, it’s been proven that the chorus of mathematicians are more in tune with reality than the chorus of, well, I don’t know what you’d call them. Wishful thinkers, possibly.
Now, 2010, we’ve a whole lot of other problems linked to insane bank lending practices which were even worse for commercial than they were for residential/specuvestors, one nationalised bank and a bunch of other banks being state supported via NAMA and an increasing number of mortgage repossession cases and arrears.
Nowhere have I seen anyone identify what we actually want. When I see all this bailing out, I suspect what people want is to avoid the following reality:
We borrowed too much and have to pay it back.
But that’s just a short term vision. In truth, the question is more “what are our housing requirements and how do we best fulfill them to the benefit of society?”
I don’t know the answer to that. I get the impression that people like feeling rich in a way that rising property prices made them feel wealthy; but this is not sustainable as we’ve already discovered, rather spectacularly. I get this impression based on the frantic efforts to NAMA-ise the residental hard done mortgage holders also.
But that’s not going to fix much. I think we need to look at the wider question of whether people should count their home as wealth at all? In principle I’m against a wealth tax but if people do see their home as a source of wealth while they are still living in it, then maybe it should be subject to a wealth tax. Can you imagine the speed at which property prices would have risen if every year you got charged more as property values rose?
The screams would have been audible from Mars.
On balance I’d like to be able to afford a three bedroomed property on my salary. It’s not unreasonable I think and is the sort of salary that would have afforded me more than a 3 bedroomed house in the past. But until recently all it afforded me was an apartment about 20 miles from where I work. A one bedroomed apartment.
But something else I’d like to see is a wholesale reform of how we handle various types of rental in this country. Our commercial leasing system appears to be opaque and weighted heavily against the customer, together with upwards only reviews, for example. Our residential tenancy legislation was updated in 2004, with howls of anguish from the landlord class but if you’re either a tenant or a landlord, it’s still rubbish. It takes months to get any disputes sorted out via the PRTB which is the responsible agency. Far too many tenants complain about unlawfully withheld damage deposits and far too many landlords expect properties to be handed back to them in better condition than they were handed over in the first place. Our reliance on furnished accommodation annoys me. I really don’t mind the idea of renting for my whole life but you know I’d like to replace the kitchen I have now. If I keep this place longer than a year I would be interested in replacing the kitchen and whereas it’s normal to negotiate things like this with landlords in France, Germany and Belgium, it’s almost unheard of here.
I don’t know.
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