Policies for Falling Property Prices

[FutureTaoiseach]

I think the silver-lining to the property-cloud may be that it finally forces our politicians to get their act together in the sense of pursuing policies that will shift our economy away from the "eggs in one basket" approach whereby we became too dependent on the property-market for economic growth. Stamp-duty does indeed have to go.

[civic_critic]

And something to deal with property speculators who snatch up so-called affordable housing. In Clonakilty during the last few weeks (no doubt a pre-election ploy to make people think something is being done locally), just six houses on one new estate (hundreds have been built over the last few years in and near the town centre) were offered at reduced prices. People on waiting lists for these affordable housing were all mailed and apparently there were over forty applications to the council. I just discovered yesterday that a well off builder turned up at the site in recent days and has secured two of them - one each for his two daughters, he said. So, all of these people had filled out forms and duly posted them off hoping that they would be one of the lucky ones and the whole thing was corrupted in the usual way. All he has to do is to sit on them for ten years while they appreciate in value - he probably wont even bother to rent them out.

Well then it's very simple. Squat them and if anyone comes to take them back in the name of this gob************************e, fight them.

If not, what do you expect?

[Thac0man]

The only policy that is needed is regulation and new taxes to stop potentially more affordable housing being bought up by investment groups who may seek to benefit from the long term yeilds provided by rents. Thus far the Governments woefully slow approach (and lamentably inadaquate) to regulating property management companies does not bode well.

Lets face it, the government is clueless and always has been. They will do what they have always done, stand back and let things take their course. I remember in one recent year the government forecasts for the economy were so wrong that three times more jobs than predicted were created, but half the tax income forcast actually materialised. Those statistics look something like 100% jobs and 100% tax :but ends up as: 300% job growth and 50% tax yielded. With that kind of track record any pre-emptive action or legislation by the present government could be disasterous.

[freedomlover]

And something to deal with property speculators who snatch up so-called affordable housing. In Clonakilty during the last few weeks (no doubt a pre-election ploy to make people think something is being done locally), just six houses on one new estate (hundreds have been built over the last few years in and near the town centre) were offered at reduced prices. People on waiting lists for these affordable housing were all mailed and apparently there were over forty applications to the council. I just discovered yesterday that a well off builder turned up at the site in recent days and has secured two of them - one each for his two daughters, he said. So, all of these people had filled out forms and duly posted them off hoping that they would be one of the lucky ones and the whole thing was corrupted in the usual way. All he has to do is to sit on them for ten years while they appreciate in value - he probably wont even bother to rent them out. Many houses around Clonakilty are empty and it is common practice to abuse the law by saying the house is for a family member. In one case I know of, the daughter in question is actually living in Australia - and the house has never been lived in since it was built four years ago. It's happening all over the country. Public spaces and the countryside are being destroyed for ever so that wealthy people can find somewhere to park their money - and keeping the property market artifically high in the process. And meanwhile people are killing themselves to pay off mortgages and pay rack rents just to keep a roof over their heads. The whole thing is wildly out of control.

It was the same story on Sherkin Island near Baltimore when a bunch of affordable houses were built there. At least two wealthy property owners bought houses that were intended for lower income earners. Renters must pay cash only - often without a contract. If you query that arrangement because you want to claim the tax you are entitled to, you will be told within a short space of time that the house is wanted for a family member and will have to move. The recent legislation hasn't changed anything for many people.

I see something of a contradiction here. The thrust of this thread is that property prices are going to fall. Some of the posters are gleefully predicting a property price crash. But, you're whining that some people are buying houses now and will make big profits over the next few years as they appreciate in value. You can't have it both ways.

[ibis]

And something to deal with property speculators who snatch up so-called affordable housing. In Clonakilty during the last few weeks (no doubt a pre-election ploy to make people think something is being done locally), just six houses on one new estate (hundreds have been built over the last few years in and near the town centre) were offered at reduced prices. People on waiting lists for these affordable housing were all mailed and apparently there were over forty applications to the council. I just discovered yesterday that a well off builder turned up at the site in recent days and has secured two of them - one each for his two daughters, he said. So, all of these people had filled out forms and duly posted them off hoping that they would be one of the lucky ones and the whole thing was corrupted in the usual way. All he has to do is to sit on them for ten years while they appreciate in value - he probably wont even bother to rent them out. Many houses around Clonakilty are empty and it is common practice to abuse the law by saying the house is for a family member. In one case I know of, the daughter in question is actually living in Australia - and the house has never been lived in since it was built four years ago. It's happening all over the country. Public spaces and the countryside are being destroyed for ever so that wealthy people can find somewhere to park their money - and keeping the property market artifically high in the process. And meanwhile people are killing themselves to pay off mortgages and pay rack rents just to keep a roof over their heads. The whole thing is wildly out of control.

It was the same story on Sherkin Island near Baltimore when a bunch of affordable houses were built there. At least two wealthy property owners bought houses that were intended for lower income earners. Renters must pay cash only - often without a contract. If you query that arrangement because you want to claim the tax you are entitled to, you will be told within a short space of time that the house is wanted for a family member and will have to move. The recent legislation hasn't changed anything for many people.

I see something of a contradiction here. The thrust of this thread is that property prices are going to fall. Some of the posters are gleefully predicting a property price crash. But, you're whining that some people are buying houses now and will make big profits over the next few years as they appreciate in value. You can't have it both ways.

It's a question of intention. The developers intend to make a big profit by buying affordable housing. If they fail to do so because of a fall in property values, that doesn't lessen either their venality or the evident corruption of the system - assuming the cases to be accurate.

[irishpeoplearewhingers]

A property tax? So a young couple get mortgaged up to their necks and must pay more on top of that? No way. However, a tax on speculative purcheses may well be in order. Land hoarding needs to be cracked down on too.
As for the current reduction in prices, no policy is needed at all- just let them fall until such time as people start buying them again. No point in trying to shore things up- people took specualtive risks so let them deal with it themselves.
The big issue is to encourage capital to be invested in productive assets, rather than more houses.

[zakalwe]

ipaw,

well, if stamp was abolished and a form of property tax introduced then there would be no need for families to fork out 30-40k for the privalige of moving from a two bed to three bed, or three bed to four bed when the family expands.

also, it'd spread the burden stamp duty has placed on young families on the move, to affect all home owners, and for those who, by virtue of luck of birth, bought their fine 4 bed houses before the tiger economy pushed the prices up to between 500k to 1million.

my brother happens to be 13 years older than me. be bought a 4 bed house in foxrock (south co dublin) for £98k, meaning that his mortgage would be approx €500pm. the current value of the house is approx €900k. his stamp duty was negligable (the bands were approx the same back in 1995) but for me to buy the house (if i had children) i would pay €81k. ironically, if my parents were loaded and could gift me the money in a tax efficient manner, i would not have to pay stamp at all! thanks, bertie the socialist!

a property tax, and abolishment of stamp, would encourage people to move when required, and not when they could save up the cost of the stamp.

[Steerpike]

I always find it funny when our gombeen "free-marketeers" say that the Government shouldn't upset the property market by intervening in it. Yet that is precisely what they have been doing for over a decade now, with tax shelters such as section 23, where wealthy investors can write off tax against rental income they receive from other properties. That's why there are over empty 200,000 properties on the market, yet many young people are finding it impossible to get on the lower rung of the ladder, and rents are going up. Only in Ireland.

But, of course, the fine citizens of Ireland chose their leaders and placed their trust in B-B-Bertie the B*****s, so we don't know what he might do to placate his builder mates. And before someone tells me that these shelters are being/have been phased out, I suggest they look at the property supplements of the newspapers.

[TheBear]

<Mod>Moved to the Economy forum.</Mod>

[Fr. Hank Tree]

<Mod>Moved to the Economy forum.</Mod>

Keep up the good work, bear