A couple of things cropped up this weekend that make me feel the need to write about property in Ireland (again). It’s been an ongoing saga in my life for the guts of 15 years at least.
Yesterday, Leo Varadkar suggested that people get deposits by:
- going abroad and working for a while
- getting the money from their parents
- other loans.
Back in the day when I was apartment hunting in north county Dublin, banks didn’t like things like the getting of money from parents. They wanted proof that the money was a gift, which would not need to be repaid at any point, or likely to cause any lien on the property. As for other loans, well technically they were a no-no.
Per the Indo Leo Varadkar financed his property via a 100% mortgage, which in the grand scheme of things was never a really great idea. Apparently this was 10 years ago. Anyway.
A couple of things struck me about this, and a key one is this: there is a generation of politicians coming for whom the last 20 years is normal. Even the bit where property values halved in a comparatively short space of time, mostly, property is expensive and you need to be special to buy any. I don’t think this is healthy for the country as a whole and yet somehow, the visions coming out of young politicians are not really in the direction of fixing access to housing. Rents in Dublin are ridiculously high. So you can’t afford to buy and you can’t afford to rent. Losing on both fronts.
The usual policy in Ireland is to throw money at the problem via help to buy schemes or preferential transaction tax rates. These are usually targeted solely at first time buyers. During the last week or so, a journalist commented that she couldn’t understand why they weren’t extended to second time buyers or those stuck in negative equity. She called these people the forgotten generation. I wasn’t really impressed. These people have bought homes already, at a time when it was massively obvious that property would not continue to rise in value regardless of how much they claim now they did not realise it.
The thing is, the big issue with Ireland right now is the disconnect between the cost of housing and the salaries being paid to people. In truth, there’s a hard choice to be made: massive inflation on the salary side or massive deflation on the property values side. Neither is good. No one wants to admit fixing this will be a long term problem either. No one wants to understand why the cost of building in Ireland is so terrible when the output is also fairly terrible, and no one seems to want to ask countries other than the UK what are possible solutions.
It’s all ready depression. In the meantime, the last option left by Mr Varadkar, the going abroad to earn some money, well that isn’t a panacea either. What he is saying that with all the economic growth in Ireland, it still cannot house its population. It’s a disappointing admission of defeat.