Well, in most countries, construction is counted as consumption, buying and selling as investment (at least in the minds of the participants). So ZIRP has encouraged levereaged asset hoarding and rent seeking. Which really shouldn’t surprise economists, but once again they’re caught flat-footed, it appears.
Construction is counted always and everywhere as investment, not consumption.
It’s the production of something that becomes an asset, not the production of something that gets used up. It’s really simple.
That’s why I said: (at least in the minds of the participants). Look at it this way. I have x million to spend at ZIRP. I can buy a piece of land that will appreciate at y% with me sitting on me hole. Or I can buy a smaller piece of land and build something on it with all the work that involves and gain y-n%. At this point in time, construction is a cost (as snaps was sort of pointing out) with an uncertain return. Yes, it’ll add to the capital stock, but only after it is complete; it only turns a profit on the investment when it is sold, and it’s not clear there are buyers who can buy at a profitable price point, at least not the price point that outweighs sitting on your hold on an existing appreciating asset.
I wish you well with your scheme that involves riskless gains on pieces of empty land in Ireland
Hey, I think it’ll end in disaster too, but that’s how I see the participants behaving. I have even heard that mezzanine debt style development schemes (shareholders in development schemes with senior and junior debt ahead of you) are creeping back. You’d be mad not to apparently…
Mortgage affordability barrier being discussed now on Radio 1 with Cliff Taylor and Karl Deeter…should the CB rules on mortgage limits be changed
let me guess Karl thinks they should be and Cliff doesn’t?
Yes though Deeter said the CB is there to protect the financial system and not house prices. He reckoned younger folk will go on to get many wage increases as they age so 4 times your salary now is much lower that ratio in 10 or 20 years time
so didn’t even pretend it would help supply, just wants to transfer even more future wealth to older generation
Sesame Street: Meet Lily, the first homeless muppet
Normalization. Not good.
Michael O’Flynn was on Newstalk Breakfast this AM looking for the CB to raise it’s mortgage limits to 4.5 times salary
Newstalk Pat Kenny show now discussing the housing crisis, constitutional right to housing. Karl Deeter and Richard Boyd Barrett also.
Karl Deeter v Richard Boyd Barrett on PatKenny
property tax, social housing, nimbyism - Pat mentions his own objection in Dalkey
edit: looks like we’re both tuned
Ah that was an entertaining argy bargy
Arizun stay in your home solutions…a MtR type scheme for the squeezed middle who don’t fall under any existing government scheme.
On Sean O’Rourke show now
Distressed homeowners contact them. They then contact the bank where the value of the home is discussed. Thats what the fund will pay and the bank takes the hit on the difference v’s the mortgage.
€100m fund. Irish owned.
Horizon own your house and give you a long term lease with an option to buy.
Like to see themselves as a ‘pension fund rather than a vulture fund’.
Market rent is charged (surely that will be higher in Dublin than the current mortgage payment in most cases).
You can buy the house in the first 6 years at the price the fund paid + 40% of price appreciation during that term.
Just another attempt at Nama beag, via the back door. This time with a middle man in between. The losses on the Mortgages are absorbed by the Banks, which means by the taxpayer who doesn’t get paid back the capital injected into the Banks. Who can quantify the extent of this loss to the taxpayer?, would it be up before the Public Accounts Committee at any stage. I await the day. There is not one political grouping willing to tackle this issue, meantime the suckers who pay their way/live within their means, scrimp and save ( the majority at all times, by definition of a bail out) will foot the bill.
Brendan Burgess discussed it on the Ciara Kelly show earlier
Arizun and Charlie Weston on The Last Word now also
Paul Murphy TD and Fintan McNamara (Landlords Assoc) on Pat Kenny show now discussing the latest Tenants Rights legislation going before the Dáil this week
Strategic defaulters on Joe Duffy now talking about what they prioritise ahead of their mortgage and also a lot about ‘owning the banks’ ‘rights to a shelter’ etc
edit- here comes David Hall to save the day
notable that the caller being threatened with eviction faced some challenge from a common sense caller who pointed out the facts of life. Of course he was dismissed as an awful person, but fair play that man. Also the loan is with BOI who have paid back the state fully and then some.
Another elderly woman on now who downsized and got out of Dublin rather than strategic default. This was despite her having to care for her husband who had a major stroke. Tough for her, but she engaged, held her hands up and got on with it. Fair play