> They're not unrelated. If you've got a society full of people chasing
> homeownership and an accommodating financial system, then prices are going
> to rise, and you will create a constituency for ever-rising prices and a
> consciousness that views that as a good thing. Why is it a good thing when
> the price of shelter rises at a pace faster than the rise in average
> incomes?
I understand that Doug. I also understand what it is like to be priced out and left to the mercy of a virtually unregulated rental market and have no security. And I know whether I'd buy or rent if I had any choice.
I didn't say there was any good news, I'm just pointing out that the desire to own a house is rational, even given their over-inflated prices - not having your own house equals not having any security in an increasingly stratified society.
Here's a question for you: what about the situation here today where a huge percentage of the native workforce is engaged in construction (a notoriously flaky sector), most of which is residential. I'm am assuming that a slow down in demand could have huge effects on the rest of the economy. Would this be likely cause a crash in house prices?
Another question: Ireland has the housebuilding on something like the scale (relatively) that James Heartfield has coherently argued is needed in Britian. Why are prices continuing to rise here? (Serious question, by the way - Ireland's population is tiny but demand is still there.)
For the record, rises in house prices outstripped the rise in average incomes about ten years ago and have continued ever since. Last September it appeared that things were going to 'slow down' and indeed they did - at the top end of the market (houses over €1.5 million). What about the rest of us? Last year I visited a site in the middle of nowhere and interviewed a developer. On the way back I caught myself thinking for a second that these houses, three and a half hours outside Dublin (when the roads are clear, which is not during rush hour), were reasonably priced at €300,000! Never mind the fact that I wouldn't want to live there and that the houses were not to my taste, even if I could get a 100% mortgage I wouldn't be able to afford one.
Also, Fingal local authority in north Dublin and Dún Laoghaire county council in south Dublin have both recently passed local regulations stipulating that every new house must obtain a certain percentage of domestic energy must be fulfilled by using renewable sources - solar panels, wood pellet boiler, wind turbine, geothermal heat pump etc. They also mandate insulation standards that go way beyond building regs. By using some Byzantine matematical schema they have 'proven' that this won't cause a rise in house prices because developers will pay less for the land as opposed to passing the cost directly onto the buyer. Why do I suspect they're wrong? For a start, it ignores the land banking that's been going on here.
---- Irish Labour statistics for March to May 2006 Population 15 Years & Over: 3,370,300 Agriculture, Forestry & Fishing: 144,500 Other Production Industries: 288,500 Construction: 262,700 Wholesale & Retail Trade: 284,400 Hotels and Restaurants : 116,300 Transport, Storage & Communication: 120,700 Financial & Other Business Services: 267,300 Public Administration & Defence: 105,100 Education: 135,600 Health: 201,200 Other Services: 120,600 ----
Jason.
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