Fintan O'Toole: The landed class who blew the bubble
Interesting. No mention of his employer’s and his professions’s central role however…
What were some of the good reasons for house prices to in Ireland over this period, in real or nominal price terms?
Would a good reason be that building regulations mandated higher specifications of materials (e.g. insulation)? Would a good reason be that policy dictated by a cabal of sectional interests (An Taisce, The Georgian society, existing land owners) determined where a house could be built, and what size and shape it could be?
Fintan O’Toole does not address the real reasons for the fact that prices got so high in Ireland because of a combination of EU farming subsidies, planning restrictions, taxation and monetary inflation caused by deliberate government policy. (the ECB is a creation of governments not markets)
Remove the subsidies and the price of agricultural land drops as inefficient farmers are forced out of business (see New Zealand), the price of land drops and new entrants come into the market who can produce food at a cheaper price, this is a good thing surely?
Remove the planning restrictions and the price of the land banks collapse as people will build where the services and jobs are, and the developers will need to concentrate on quality and location to attract buyers, rather than trying to fit as many shoeboxes into a limited space to keep within the council restrictions and turn a profit.
Remove the tax breaks and people don’t build in areas where there is no demand, remove the property taxes such as stamp duty, property ownership taxes and capital gains tax (a tax on inflation), there is no distortion of prices and the government cannot increase it’s power using patronage to the special interests (unions, business interests and voters)
Remove the monetary inflation and the prices of houses actually comes down or stays the same over time and peoples standard of living rises, and they don’t have to keep running ever faster on the treadmill just to keep a roof over their heads.
Fact of the matter is land speculators buy property that they believe people would like to own. They develop the properties at their expense. If they guess wrong, they lose money – lots of money. So, they try to offer properties for sale that people will be willing to pay for. These properties are cut up and sold in terms of the taste of buyers. The horror that they might try to earn a profit.
Kick away the legs of the property stool I underlined above and we will have a much fairer society, developers will have to serve the market (that’s you and me) if they want to make a profit.
Why remove capital gains tax?
Give two people a 90% 20-year mortgage that gives them an amount of money to bid for the same property and that limits the price at which a property will sell.
Give tje same two people a 100% 35-year mortgage that gives them a greater amount of money to bid for the same property and the price of that property goes up. It is what people can afford to pay based on the credit they are given.
There’s no magic here. It is simple house-price inflation fueled by too much credit. A larger amount of money chasing the same commodities causes an increase.
The Central Bank, Financial Regulator, Department of Finance, Department of the Taoiseach (all public servants by the way - who said the public servants had nothing to do with the current situation), banks. etc. all participated in the overheating of the market by making credit too easily available and then lending to developers to provide property to satisfy the artificial demand.
I looked at buying some property a few years ago as an investment. The logic was nonsense. The cost of acquisition, renovation and the cost of the mortgage were not covered by the rental income. The purchase only made sense if you assumed substantial and continued capital appreciation and a liquid market that would ensure the property could be sold. That is the very definition of a bubble.
This mess was so predictable and yet there is a pervasive sense of powerless at the manifest incompetence, imbicility, dishonesty, hypocrisy and sheer fuckwittery of those in charge.
Sorry, none of these words are good enough, you forgot the word that needs to be said out loud: criminality.
Criminal negligence, criminal dereliction of duty.
Criminal criminal criminal.
A lot of people will end up behind bars before this is through.
First on the list, Bertie and Cowen.
He said why. It’s a tax on inflation - except where the capital gains are as a result of rezoning, but he wants rezoning done away with too.
That’s a very insightful observation - CGT is a tax on inflation. Charlie McCreevy did away with the roll-over on CGT where when you sold an asset, such as an investment property, there was no CGT if you invested the money in another investment property.
Then perhaps the acquisition cost should be increased by an indexation factor for inflation, like it use to be.
You are having a laugh aren’t you.
Dream on IM, no one of any consequence is going to be jailed, this is Oirland (or as the CIF, bwankers & Zanu-FFGP say, this is Ourland).
As far as I know the acquisition cost is still indexed. In fact I’m studying tax at the moment and I’m rightly fucked if this isn’t the case!
It isn’t the case. Indexation was done away with about the same time roll-over was done away with.
Colm Rapple does a nice simple book every year that explains it. Tell your course professors.
Also, the idexation that was, was very mean. It bore no relevence to actual inflation, never mind house price inflation.
Inis Man you gotta be joking-Cowen and Bertiefuck behind bars? Holding them up much more likely-we’ll be lucky to keep the latter out of the Aras
If that cynical fuck ends up there, I’ll give up my heard earned and yearned for citizneship.
Bertie’ll end up in the Phoenix Park. And i’m not talking about the zoo here!!
I heard someone on Joe Duffy saying we should bring back McCreevy to run the country, as he started the ‘good times’.
It’ll be a couple of generations before we rid this country of all the muppets we’ve ladened ourselves with. Mattie McGrath, sweet fuckin jesus.
I’ve switched off the radio and loaded up some music. (if i could only ignore the Pin for a day or two all would be well)
I hear ya.
Be fair now. Remember where Mattie represents. He is of course a much more debonair example of the species than Jackie Healy-Rae (snigger)
When you represent South Tipp certain things are expected of you. Take that auld relict of Anglo-Irish dacency Martin Mansergh himelf. Last October his most prominent appearance in the Tipperary Star was:
Mansergh welcomes extension of slurry spreading deadline’
Councils demand meeting with Harney on hospital threat - Nationalist Last week, Fianna Fail TD Mattie McGrath walked out of a meeting between South Tipperary Oireachtas members, HSE chief Prof Brendan Drumm and other HSE …
nationalist.ie/13447/Council … 5441712.jp - 44k h
Tractor protest highlights falling farm incomes - Nationalist The start of the protest was sent off by a group of local TDs and county councillors, including deputies Mattie McGrath and Tom Hayes. …
nationalist.ie/13447/Tractor … 5733617.jp - 45k
You’d think these fuckers had nothing to do with the government of the day