Wednesday 20 September 2017

Central Bank can't tackle house affordability crisis

It's the Government's job to address widening gulf between earnings and property prices

Decisions: From left, the Central Bank’s deputy governor of financial regulation Cyril Roux; deputy governor Sharon Donnery; governor Philip Lane; head of financial stability Mark Cassidy; and head of communications Jill Forde at a press briefing last week during which they explained mortgage lending rules would be relaxed around deposits needed for first-time buyers. Photo: Tony Gavin
Decisions: From left, the Central Bank’s deputy governor of financial regulation Cyril Roux; deputy governor Sharon Donnery; governor Philip Lane; head of financial stability Mark Cassidy; and head of communications Jill Forde at a press briefing last week during which they explained mortgage lending rules would be relaxed around deposits needed for first-time buyers. Photo: Tony Gavin
'Financing unaffordable house prices, rather than dealing with the root causes, remains popular with legions of beneficiaries, including owners of overpriced homes and development land, and their political representatives.' Photo: Ben Birchall/PA Wire
Colm McCarthy

Colm McCarthy

When a policy problem gets too big to solve, the policymakers can sometimes avoid, or at least postpone, the admission of failure and the need for reform.

The most dramatic example is a dysfunctional housing market that fails to deliver affordable properties.

Excessive house prices get embedded in the balance sheets of banks and households through long-term mortgage contracts.

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