Monday 10 December 2018

David McWilliams: Property porn is back - and it is as big a threat as Trump or Brexit

Estate agents’ windows are once again filled with flowery puff pieces for property
Estate agents’ windows are once again filled with flowery puff pieces for property

David McWilliams

'Stunning façades are finished in a unique glass cladding by Lithodecor, the reflective finish breaks down visual barriers to deliver a magical interplay between landscape and architecture.

"It's about dissolving the buildings into their surroundings, while walkways suspended over babbling brooks draw the senses to the sounds, sights and benefits of nature.

"A Kilkenny Limestone plinth elevates the apartments, improving views and promoting the permeation and reflection of light throughout the development. Full height anodised windows and bespoke glass balcony balustrades channel swathes of light indoors while allowing the great outdoors to become a meaningful extention [sic] of living space. Dunluce is an inspiring vision of cosmopolitan apartment living in a world apart.

"Dunluce is a utopia of vibrant foliage that dances in shadow, colour and light throughout the day and seasons."

We're back! The property bull**** machine is in overdrive yet again. A decade after I devoted an entire chapter of a book, 'The Pope's Children', to the saccharine language of middle-class property porn, we are being bombarded again. Read this stuff above again knowing that Dunluce is a new flat complex in Dublin.

In plain English, when we break down this hyperbole we understand that the silly term "reflective finishes" actually means "see-through". Glass tends to be transparent. "Breaking down visual barriers" means being able to look out through a window. "Dissolving buildings" is perhaps my favourite bit of this. As for the "utopia of vibrant foliage that dances in shadow, colour and light", well, I couldn't have described a back garden more accurately.

David McWilliams
David McWilliams

The point is that the marketing, the branding and the BS has begun again across the property market, and the objective is to mortgage another generation of Irish people to overly expensive housing that adds no value whatsoever to the economy. In fact, given the billions tied up in property here - billions that could be used in other productive investments - it is obvious that the Irish economy loses out hugely from expensive property.

The housing/accommodation conundrum is a real crisis, not just because of the economic, social and emotional cost of expensive housing but because as Ireland becomes, yet again, fixated with property, the world economy is moving on. The globe is not waiting for Ireland to get over its addiction.

Sometimes, the disconnect between what is happening domestically and what is going on around the world is quite shocking.

If Ireland was North Korea and we were cut off from the rest of the world, this ostrich-in-the-sand approach might be understandable. However, Ireland is the most open economy in the world. We need to be aware of the rest of the world and remain one step ahead.

Although we talk about the "Irish economy", we are not an autonomous economy in the real sense of the word. We are part of the global supply chain and therefore events abroad have an amplified impact on our incomes. As a result, we can't afford the luxury of prices and costs here being out of whack with the rest of the world for long.

The disparity between local costs and international norms will destroy Irish prosperity, unless we can make ourselves cheaper through tax scams.

And here is the rub.

It is quite possible that the tax-scam era is coming to an end, which implies that the unique Irish tax subsidy could be over.

This week, Theresa May said she was aiming to bring corporation tax in the UK down to 15pc. We know that Donald Trump is aiming to do the same in the US. The implication of these moves for Ireland would be that our latitude to pay ourselves over the odds and charge over the odds for accommodation is much diminished.

When we were the only jurisdiction with low corporation tax, the low tax could be used as a way of disguising a lack of competitiveness in other areas. So Irish workers could be paid more because the company would get a tax subsidy, so the wage costs could be tolerated. As the rest of the Anglo/American world brings its tax down to the same level, the cost differences between competitor countries will become more and more material.

This means that domestic costs become more crucial. As a result, when the Government gives in to public-sector unions, it may deliver some electoral advantage but it diminishes us all in the medium term. Similarly, when we see nonsense like "utopias of vibrant foliage" to describe trees, we should be very aware that this language is nothing more than code to lever people into more debt for expensive accommodation. The more indebted our people are, the more uncompetitive we will become because debt is a form of economic slavery, particularly when it is wasted on accommodation.

Therefore the issue for Ireland is to control what we can, not what we can't. There is little point in complaining about Brexit or Mr Trump's new policies whether they involve trade or tax.

We can't control other people's decisions, but what we can control is domestic costs.

The major domestic costs are public-sector wages and local property. I have no problem in paying people their fair share but I can't understand why public-sector unions seem to believe any extra tax revenue generated in this economy is automatically their property.

Likewise, when there are so many other housing models rather than the overhyped, overleveraged, overblown 'ramp it up and flog it off' model of housing, we should look for alternatives. All over Europe - a continent that rarely experiences housing booms and bust - other models such as co-operative housing work extremely well. Shouldn't we take a leaf out of their book?

The world around us is changing. We have to change with it to keep up. Otherwise we will flounder and it won't be just the buildings that will be "dissolving"!

Irish Independent

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