Central Bank 'has wrecked' house market for all buyers

So says Minister Alan Kelly

independent.ie/business/pers … 38559.html

"He said the Central Bank rules are probably the right long-term policy, but short-term “we are paying a heavy price, with people falling out of the rental sector.”

Sure don’t mind the long term…

On Planet Kelly it’s not only the CB that’s at fault.

He blames everyone except himself.

It’s incredible that you never see analysis looking at what the kicker to economy would be if everyone’s mortgage was 50% lower than today (think local QE), if house prices decline on the back of the CB rules.

Next on the agenda should be addressing the issues in the country’s variable mortgage rates, arrears, early and late year costs (Child care and nursing homes) and then health costs.

This man is a dangerous idiot.

Kelly is from Portroe just outside Nenagh, County Tipperary, and is the son of Tom and Nan Kelly. Educated at Nenagh CBS, he subsequently attended University College Cork (UCC) where he completed a BA in English and History in 1995. Two years later he completed a M.Phil in Political History. Kelly continued his education at Boston College where he achieved a Certificate in Leadership in 1999. He returned to Ireland shortly after this and completed a MBS in eCommerce in 2002. Kelly subsequently worked as an eBusiness Manager with Bord Fáilte and Fáilte Ireland.

Kelly is married to Regina O’Connor, a primary school teacher who was raised in Waterville, County Kerry. The couple have two children; a daughter and a son.

Above from Wikipedia. Probably a typical enough background for an Irish politician. We get what we deserve and all that but it’s still scary when you hear them talking toddle.

What’s bad about lower house prices for buyers?

What a clown. His government have all the levers to solve the housing crisis if they wanted to. He has the audacity to blame the one thing that is actually helping buyers. Nothing to do with the fact that Baldy is running rings around him… incredible

To play devil’s advocate for a moment (and as a buyer myself) when you get down to it no one really sees lower prices as a bad thing for buyers and future generations. Unfortunately, 12 year olds can’t vote and declining house prices are on a whole a bad thing for property owners (not looking to trade up) aged 40-70 who do vote.

Essentially, declining house prices have a different view depending on where you are in life. Personally, for most of the politicians you’d imagine declining house prices would be negative for them personally.

An interesting point to debate would be: Would Ireland be a better society if house price declined 50% by 2030?

So that means, that everyone on hear will probably have bit the bullet and bought for starters :slight_smile:

Whilst a lower proportion of income being used on housing would be beneficial, one also needs to consider how property assets make up a large proportion of household wealth which is used to fund old age. You fast forward to 2030 and it’s great for the younger generation that they pay less for their house but there’s a whole host of second and third derivative problems people need to deal with. See all related Pensions ticking time bomb threads and articles.

Its a tricky business this running a country’s economy and all!!

It’s not obvious to me that flat prices are “helping” buyers, but maybe it depends on what you mean by “helping”.

There are a (currently more-or-less fixed) number of dwellings in Dublin and increasing demand. If the goal is to help more people live where they want to, monkeying around with credit rules in either direction isn’t going to change that. People will be “forced” to live places elsewhere than they prefer (including with their parents).

The only thing that will “help”, assuming we don’t want to turn off the demand tap (e.g. by limiting inward immigration) is more supply.

Noonan’s idea is to let the credit taps gush until the building starts. This is a perfectly rational position for a free-marketeer, and has the dual advantages of (a) requiring the government to do bog all in the the short term, and (b) being acceptable to the masses who see big rents and big mortgages as interchangeable evils.

I’d rather government had a proper conversation about what sort of capital we want, taking into account infrastructure, planning, aesthetics, economics and so on.

If we want the city to be a place for the well-paid working age population, that’s easy enough to solve. Just whack up property taxes in a central “economic zone” and kick all the poor people out to the sticks where they can either cheaply sit on their arses, rob the older unemployed (pensioners) who’ve been “incentivised” to give up their city-centre accommodation, or spend half the morning and evening sitting on crappy public transport to get in to their low wage jobs in the city. (I’m not advocating this plan btw).

What irritates me is the idea that the Dublin we have is accidental. It’s not, it’s the result of deliberate State action and inaction over decades, the last half-decade of which is squarely the responsibility of the current FF/Labour govt. Doing nothing is a deliberate policy action.

Tourism is a €5bn industry here, with a significant amount of business driven by online sales. Bord Failte and Failte Ireland support tourism sector businesses with ecommerce and ebusiness promotion, guidance and advice. Aside from that, you may have a point. No, wait. You don’t.

Or the ‘joke’ just wasn’t that funny.

This sums it up.
As usual a Politician is trying to distract people from the real issue - his inept performance since he took office.

Apart from putting on extra trains and buses in his constituency which lose millions per year as they have very few passengers, he’s done nothing of note. Oh wait he solved the homeless crisis in Dublin last xmas…how’s that looking now?

This is incorrect and perpetuates the myth of supply and demand holding up prices.

  1. If you were to say “the number of people who would like to buy a home is increasing” that would be correct.
  2. If you were to say “the number of people needing accommodation is increasing”, that’s probably correct, I dont know immigration, emigration and birth rate stats of the top of my head.
  3. If you were to say “the number of people who can afford to buy at current prices (a proxy for demand) has fallen dramatically since the CB rules were introduced” that would be correct.

So at this exact moment supply > demand in certain brackets. As a market overall however, the number of potential buyers who can have financing in place to be able to buy at current house prices has dropped through the year.

But,

the fact of the matter is that demand has actually just fallen by around something like 20% in Dublin due to the introduction of the CB rules. that 20% could not be more back of the envelope (feel free to run through the figures properly) but I think the quantum and direction are broadly correct. Hence the inventory build we are seeing and anecdotal reports of buyers not having finance, estate agents crying to their Mums, politicians and media and most importantly inventory building in the system (ignoring the backlog of repossessions and off market stock).

So if you compare supply and demand to a year ago:

Supply:

Stock of properties for sale is up significantly year-on-year. Someone will be able to provide exact numbers I’m sure.

Demand:

  • Broad economy has marginally improved. - increasing demand.
  • CGT exemptions have fallen away - decrease demand.
  • CB rules introduced and we are only just starting to see the fall out - massive short term decrease in demand.

The actual supply and demand equation means that prices will either fall to where that cohort who have been excluded can transact… or volumes will decline up to a point where buyers have been able to increase deposits and incomes to meet the prices we had at the start of the year.

This will take a year to play out although we should start to get concrete indications around March/April given the historic nature of much data and time for vendors and estate agents to react to the the new norms and market conditions.

So that’s two of you not funny then.

Wow.

Some Eamon Ryan levels of stupidity there.

Also fairly massive ego and very willing to slag off his colleagues. For a guy who’ll need transfers it’s pretty foolhardy

That depends whether Eschatologist meant demand for dwellings to purchase or just demand for dwellings.

I suppose from Alan Kelly’s point of view, in the short term there’s an election, and in the long term he wants to keep the job and perks he’s got at the moment (or add to them)

Im sure even 12yo see all of this for what it is …middle aged, middle class auld fellas shite talking about money.

Hopefully Kelly’s whinging is just that.

independent.ie/business/iris … 37903.html

I’m waiting for Liz O Kane to weigh in behind Alan Kelly here. He needs heavyweight allies on this one. :slight_smile:

Boston College in Dublin, no? Or is Dublin no longer in Ireland?