Saturday 24 June 2017

Great expectations - the driving force behind latest property crisis

Accommodation should be a fixed cost, a cost faced by all of us, just like the cost of electricity. Photo is posed
Accommodation should be a fixed cost, a cost faced by all of us, just like the cost of electricity. Photo is posed
David McWilliams

David McWilliams

Is it possible that we have got ourselves into the position where we have a housing crisis again, where those at the bottom and middle can't find a place to live and those moving from the middle upwards are locked into, yet again, bidding wars for homes where the speculator and the owner are pitted against each other? Could we be in the situation where investors and large foreign funds are sitting on land waiting for the prices to go up in order to make a killing, thus exacerbating the supply shortage? It's hard to believe - after everything we have been through - but it's true.

Above all, the Irish property market needs stability. It needs to be liberated from constantly changing expectations about where prices are going to go. Expectations about future prices are what destroy a property market and lead to the unhealthy intrusion of speculators in the market for accommodation.

Accommodation should be a fixed cost in an economy, a cost faced by all of us, like the cost of electricity. Can you imagine what would happen to the use of electricity in Ireland if people thought the price was going to change on a daily basis and everyone had their own generator trying to sell at the best price to a national grid? Imagine the surges and scarcities in both use and supply as users and suppliers tried to get the best price.

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