Marc Coleman: When State takes its foot off market's throat, house prices ought to recover
We can't return to the craziness of 2006 but buyers today are being hampered by taxation
SOONER or later this Government will have to make up its mind about the housing market. Does it or doesn't it want it to recover? Everyone agrees that the housing market will never return to the insanity of 2006. But if by 2016 house prices remain stuck at present levels, then the economy will be in trouble. So, one suspects, will the Government. In January, Fitch ratings agency said that despite halving since the boom, house prices had another 20 per cent to fall. Other respected commentators agreed.
This economist always believed that if only government would stop interfering in the market with dysfunctional pro-cyclical regulation and overtaxation, house price levels can and should settle back to 2004 levels, ie levels that are prudently and sensibly located between the extreme highs of 2006 and current dysfunctional lows.
Data published last week bears this out: In the capital, which tends to lead the market, second-hand house prices are 7.7 per cent up on the start of the year. That is according to a property price gauge calculated by Douglas Newman Good. Anecdotally there is also clear evidence that where multiple bidding is healthy, 2004 price levels are now being secured for some properties. And this despite a bad start to the year: in the first quarter of 2013, mortgage drawdowns were down a fifth on the year before. Irish Bankers Federation data points, however, to strong recovery in April and May.