Endgame 6: Housing As Shelter, Not Speculation

interesting to see what someone thinks the bottom will be.

is there a similar baby boomers effect here or will we still have a lot of people wanting to buy houses?

its interesting as this is what I have been posting the same notions since 2003 or thereabouts but I wouldn’t be claiming first of the species. Its an old argument that needs to be had. Fuck the upturns help the homeless and scared.

A temporary nationalisation of the housing market a few years ago woul dhave pushed this to action. A forced issue maybe but worth it vs our current situation.

Good find.

I fully agree with the first point. It’s never made much sense to me that high house prices are good for an economy. I’d impose a maximum mortgage amount of €150k (or an amount roughly equivalent to the build cost of a 3bed semi and the agri value of an average plot). Such a cap should limit speculation.

The variable to note on the second point is rent. Rent seems to be correlated to the property value, making it difficult to place a value on property using current rental yields. This makes it difficult to predict where rents will settle.

I understood the point to mean that property value comes in line with it’s true economic value - ie no premium to its financial return to rents. I think this was the experience of the Japanese bottom. With rents continuing to fall no end in sight to the depreciation.

yo grumps, just making a general point on using rental yields. There’s a temptation to use these to come up with a property value. This ignores the relationship between price and rent. I’m just using the second point as a springboard for this.

i think it’s more important to focus on multiples of income to determine rent rather than a notional value although i expect we mean the same thing.

the one thing i get solace from is something i read about bubbles, they always leave something behind. the internet bubble left behind the internet and all its forums etc…
the railway bubble in the 19th c in the states left behind a comprehensive rail network.
the irish property bubble should leave behind endless shelter.
however when i see the homeless on the streets i know where this societies faults are.
don’t get me wrong, i know a guy who can not live indoors. his wife and children died in a house fire and now he wonders the streets of Thurles, eating from charity, and bathing in the square fountain.
but there should be no excuse for any one to continue to live in conditions that are detrimental to their health against their own wishes.
unfortunately i see people through my job who do and it angers me to see the empties. this society is skewered and it benefits no one, including ourselves.

Well, it all depends on what you think is a benefit… Pretty much, most here won’t stand for trumping the concept of private ownership for the greater good and will uphold the concept of accumulation as their most lofty goal…

As I’ve said, we nearly went with “hobblethatbastard.ie” as the alternative forum name… :wink:


I’d have said the housing market was pretty much working as a nationalised entity a few years ago!! In all but name… Sure wasn’t it the government pulling the strings, giving the tax incentives, ensuring there was no transparency in the market (through it’s agencies), working the property developers, talking it up, giving tacit approval to the banks and all the other property blood suckers? I agree totally with your sentiment as to what property should be for. ie. shelter. But, personally, I wouldn’t be talking about government or nationalisation or party politics. I don’t like or trust these kinds of entities. They develop a mind of their own these days. Instead I’d be talking about cultural norms in society’s institutions in general. That was and is where it’s at, IMO.

at a time like this it is easy to think ‘property is doomed forever’ but remember this (and its not to promote ownership/renting or anything - just a statement). Power and survival has always rested with the landed class throughout history, if property didn’t mean anything then nobody would bother with it. The whole basis of economics is grounded in property and rents. so articles like this apart from being pure $hyt€ are grounded in what amounts to conspiracy theory.

take a look at some of the graphs, in one there is an ongoing upward trend of newbuild (in red) showing inventory, yet the housing starts are going in the opposite direction, if you continued to extrapolate this you’d see that this snapshot doesn’t hold water in the secular terms being described. it also disregards the effect inflation will have when the aftermath of stimulus plays through the real economy.

its interesting reading but that’s about it.

More like it won’t be doomed forever. But I would equate speculation with the real doom scenarios.

Only since feudal times. Which isn’t that long ago in the big scheme of things. Doesn’t mean it’s right, either.

There’s a difference between bothering with it for shelter, security, and giving a sense of well-being to your family, and speculating in it to the detriment of the afore mentioned…

Rubbish. It’s basis is in helping to create and share wealth. In reality, property creates very little real wealth over and above it’s inherent non-monetary value, as we are presently re-discovering. And it hinders the equitable distribution of wealth. As we recently re-experienced. Also, as Ruskin said, ‘the only true wealth is life’.

You’re wouldn’t occupy the most objective perspective in the world, now would you?!!

Outside exceptional circumstances, nothing should ever be “discredited as a speculative vehilce”. SPeculators are an important part of any market for a number of reasons. One good reason is that the balance between speculators and “buy and hold” investors can give a good leading indicator of a bubble - just as rational observers in Ireland was screaming about for property.

I can see a time in the future when property prices will have fallen too far - these things typically overshoot, because of cyclical effects among others. It is easy for ingrained expectations (the same ones that made an overwhleming majority of people believe prices would keep rising forever) to overly slow investment in residential construction and lack

It is likely that “speculators” are the type of market participant who will begin the action of creating capital inflow back into the sector to help kick start investment where it is need (i.e. will indeed offer a suitable return on risk capital over the future). It might be a while, do to the overcapitalisation currently (it’s the empties stupid), but it will happen.

Sure, as long as such speculators develop a sense of appreciation and responsibility towards the entity that they are dealing with. Land has a sacred-ness with regard the benefits it gives to people (shelter, well-being, security etc). Also, there is some question of natural right with respect to peoples’ entitlement to these benefits. IMO speculation in land and food should have extremely strict rules and limits. Maybe such speculation should even be brought outside the normal market system.

I started reading and thought you were joking.

You will need to base you argument less on concepts of “sacredness” and “entitlement” before you convince me.

Give me another reason. And you can’t use “sacredness” or “entitlement”… :wink:

I’d consider property as an ‘exception’. I don’t see how high property prices are good for an economy. The big problem with speculation in property is the debt. In many ways I see the problem in Ireland as a credit bubble backed by property.

I’m uneasy when speculation is funded by credit. My little observation is that the Irish Banking system has collapsed due to this :wink: .

I’m not joking. And my argument is completely based on the appreciation of these kinds of factors. If you don’t get what I’m talking about, or believe they are not significant factors in what we’re talking about, then I won’t waste your time discussing them. Anyway, I don’t have much else to contribute on this question. Sure, build the economic machinery. But if that machinery is obviously causing human hardships, then you need to start thinking how to make it work right. It is not obvious or intuitive to me that speculators should have a natural right to do as they like with things like land and food. Intuitively, it seems pretty fucked up to me, actually.

Outside abonormal circumstances the presence of speculators in markets will:

  • Add depth to a market
  • Increase price discovery
  • Reduce margins
  • Help overcome “bootstrap problems” (as I described in my earlier post)
  • Buy risk off other market particints (again pushing down the cost of that).

The Irish banking system was overwhlemed by a rampent monetary bubble. I clearly stated that the massive growth and extent of specualtion was a good indicator of the problems in Ireland.