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Tue, Aug. 8th, 2006, 12:25 pm
Death and Taxes

A theory is forming in my head that regardless of the opinions of various financial "experts" the only factor that is going to cause a change in house prices in this country is a change in government. Fianna Fail and the PDs are currently heavily funded by the building industry so they're not going to do *anything* to change the status quo (except in their own favour - see abolitions of various first time buyer tax breaks) but I really do see Fine Gael and Labour doing something well intentioned yet ultimately disastrous.
Remind me though, didn't something like this happen in England when Major's government was ousted (following a similar massive series of price rises) and Tony Blair's new labour came onto the scene?

Tue, Aug. 8th, 2006 11:59 am (UTC)
jonnynexus

Not quite; the price crash was more the end of the eighties and the early nineties - and Major won an election during that period (1992). The housing market started picking up around 95 as far as I recall, with Labour winning their first election in 97.

Having said that, your general thrust is correct. The Tories did preside over a huge price crash, and that was one of the things that - in the end - Labour were able to bash them with.

Tue, Aug. 8th, 2006 12:05 pm (UTC)
mr_wombat

Chicken and egg though, I see the crash happening *after* the change rather than being one of the causes of it so I guess Britain isn't quite an ideal example... unless the Tories were heavily in bed with the building industry in which case it entirely disproves my point :)

Tue, Aug. 8th, 2006 03:17 pm (UTC)
specky_ie

A significant difference in the UK is that there was considerably more local authority building going on than there ever was/is in Ireland. Local authorities in the UK set/collect their own budgets and many of the most active councils involved in large scale construction projects were labour controlled even though the government of the country was a conservative one.

I know of numerous underhand/backhand deals that were done at the time with labour councillors and persons working for labour controlled councils, both for personal and political gain. It was a result of these sorts of goings on that THE CONSERVATIVE CENTRAL GOVERNMENT enforced a system of compulsary competitive tendering on all project from around 1990 onwards. The result was that the lowest price tender MUST always win the job (based on the specification issued by the tendering authority). For a while everything fell into complete chaos, with contractors forced to bid prices below cost in order to win work. On the whole, this has sorted itself out now though. Building specifications are of a considerably higher standard in the uk (the paper specifications are what I'm talking about here before anyone starts getting all tetchy with me), and the processes involved in making sure that what gets built is what the client actually expected are a lot more sophisticated and more closely adhered to.

In Ireland the quality of the written specifications for new buildings (produced by architects and consulting engineers) is atrocious. NOTHING matters except cost, unless someone's pockets are being lined, and nobody EVER goes back to check that what went into the specification actually made it into the building.

I'm ranting my way off topic and into a sweat here so I'll shut up.

Tue, Aug. 8th, 2006 07:57 pm (UTC)
mr_wombat

I wonder how this parallels with the nonsense we have going where the government actually bids on land it needs instead of using compulsory land purchase orders. I guess they must have similar enough end results when it comes to pissing away money needlessly.
My brother is a builder, he works for one of the big firms and its a topic we never really go near because it'd cause a row but he freely admits that breaking every kind of rule they can get away with is very much the order of the day, especially the wacky fun that is getting planning permission for forty houses on an estate, shrinking each one by about 40% in size, ditching the gardens and park areas and then building sixty. By the time anyone has been able to say "'ang on a minute here" the families have paid and moved in and can't really be kicked out for something that wasn't their fault.

Wed, Aug. 9th, 2006 09:00 am (UTC)
specky_ie

My brother is a builder, he works for one of the big firms and its a topic we never really go near because it'd cause a row but he freely admits that breaking every kind of rule they can get away with is very much the order of the day, especially the wacky fun that is getting planning permission for forty houses on an estate, shrinking each one by about 40% in size, ditching the gardens and park areas and then building sixty. By the time anyone has been able to say "'ang on a minute here" the families have paid and moved in and can't really be kicked out for something that wasn't their fault.

...and getting around the 20% social housing requirement by building a "creche" or a "community centre" or other such nonsense.

Tue, Aug. 8th, 2006 06:47 pm (UTC)
washedoutvampir

Certainly house prices in England have gone astronmical and are showing no sign of slowing down since His Gitness got in control of things. A lot of it around my way is to do with City (ie London) Suit Monkey Gits deciding they want a second home in the country, suddenly thereby making everything in East Anglia and surrounding a real des res area and pricing all the locals who need to live close by for work, and have far more of a right to the property than some suit monkey who just wants another status symbol, out of the market. Which is why, despite the fact I have an immaculate credit history and earn well in excess of £20k p/a, I can't afford to buy anything better than a damp shoebox in some foul, poorly maintained and managed council high rise in the nastiest, most chav infested, filthy and dangerous areas. That or buy so ridiculously far out in the arse end of nowhere I'd bankrupt myself on the daily commute. Here endeth the rant.

Tue, Aug. 8th, 2006 07:52 pm (UTC)
mr_wombat

I'm more or less in the same boat (not that I'm possessed of any real desire to own my own place, it seems to be quite common on the continent to rent for life and never care and that seems good enough for me) with the cash and so on but the case here is that houses are an "investment" here - the greedy cunts who buy up half the estate here don't even have the excuse of wanting a place in the country so much as unmitigated fucking greed. So here I sit, earning more than twice what my Dad earned at my age (in real money) and a house still seems like a bad investment over time. I can't honestly believe they'll hold their value (again, in real money) over time.

I mean hell.. half a million in the city by the end of the year (£336,500), approaching 300K in the rest of the country (£202,000). I know people whose houses have increased in value by 100K (£67,000) in the past YEAR.
Sadly I can't see any way that would penalise the multiple house owners that wouldn't ultimately shaft people who are currently working hard to pay off their current mortgage of insanity. This is why I feel quite certain that a change in government WILL screw it up for everyone when they inevitably try to "fix" it.

Eventually the demand will slow down, the industry will start shedding jobs in a big way leaving people with only one trade without a job, that'll hit the economy, foreclosures will happen, the market will destabilize, confidence will take a hit and the whole thing will get REALLY wobbley. Then some dipshit whose sole qualification to intervene is being more popular than the other bloke and seriously fuck it all up.

Tue, Aug. 8th, 2006 08:35 pm (UTC)
sares2000

People get the politicans they deserve.

In economics the situation that we see in housing is sometimes called an insider-outsider problem. Most Irish voters are homeowners. Therefore they will support measures that support high house prices. Our zoning/palnning system is one problem.

The lack of domestic rates is another. I won't go into it except to say that it's a very common fallacy to think that taxes on property/land are somehow unworkable and socialist. Mortgage Interest Relief is particularly irritating in this context (and is much higher than Rent Relief).

The IMF have today said much the same - taxing property properly is frequently called for by economists and constantly ignored by politicans, because voters think it would hurt them. (Most of them are wrong but suffer from a strong status quo bias.) In principle, RPT or the like should be roughly neutral for homeowners but bad for those with lots of properties. OK, that's a sweeping simplification, but broadly true.

Oh, and I want lots of investors in the market, because I want a well-supplied rental market. A well designed property tax should have little or no impact on rental supply. In fact with proper planning laws (i.e. allowing higher density) it could encourage it.