James Fitzsimons: Meddling may leave us in 15-year slump
State agencies, which skew property prices, only prolong the pain for would-be buyers, says James Fitzsimons
Residential property prices shot through the roof until 2007. Now the Central Bank is worried that they are going the other way. The banks won't lend money.
Only those with cash and speculators are buying. Prices are reported to have fallen by as much as 70 per cent following the recent property auctions, spearheaded by Nama. They may be too low. But only an elite few can buy them. The market is not efficient and things will get a whole lot worse if left unchecked.
Economists tell us that the market will find the right price if we leave it to the forces of supply and demand. Eventually an equilibrium price will be found. But as Warren Buffet said of financial markets, he would be a beggar in the street if markets were efficient. There are always winners and losers. On this occasion the market is not efficient because too few people can raise cash.