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We'd be mad to want house prices to rise

PEOPLE keep searching for signs that things are getting better. They're not peering at tea leaves or scanning the heavens for omens. Instead it's counting deposits in the banks, the numbers on the dole queues and the latest house sales figures.

If only house prices would go up, then we would know its over. But the gloomiest predictions say we won't see peak level prices until 2020.

This news is always presented in sombre tones.

"A 3-bed semi-D is still selling for only €150,000, a drop of 60pc off the peak".

Depressing

But hang on a second. Why is that bad news? Why isn't it the best news ever that at last, a regular family home is not costing you a million euro, indentured slavery for life and the sacrifice of three goats?

Okay, for some people it is bad news. 41,000 homes were bought in 2007. A similar amount in 2006. If you bought then, it's depressing to live in a house that's not worth its mortgage. If you need to sell that house it's a disaster. So yes, you need house prices back at peak levels as quickly as possible.

But what about everyone else? What about couples starting up? What about our children when they grow up? What about the entire way our society functions? We would be stark raving mad to want house prices to go back up. In fact it should be government policy that never, ever, ever again should the cost of a family home increase to anything like the crazy days of the noughties.

Here's how much an average home should cost: two and half or three times the average wage. Not ten times two wages, a credit union loan and a dig-out from your parents. Why? Because the housing market isn't some isolated little circle of buying and selling. It effects everything.

Life in the high house price world requires a double income to buy a home.

That means a single person can't afford to buy a house and rents are high.

It means that when children come along, it's out of the question for one parent to stay at home and mind them.

No-one has a choice about how to live -- everyone is just a slave to a bank paying off a massive debt. There's no money to spend on other products or services. It means that life becomes about one thing and one thing only -- paying for your house. And there is so much more to life than that.

It also means that if one person loses their job, it's a complete disaster. I think that's one of the saddest aspects of modern Ireland: that it has become impossible for a family to live a comfortable life on a single income. That can't be right.

On the wider scale, it means that when global companies are thinking about setting up in Ireland they need to pay high wages so their employees can afford to buy a home. That puts them off. It means governments and employers have to keep increasing wages to feed the monster housing market.

Paying peak prices destroyed our economy.



beast

If I was Taoiseach, I'd find a way to make sure that never again would "the market" -- that infamous omnipotent beast -- dictate how much it costs to put a roof over your head.

Who benefited from high house prices? The government did because they made so much money on taxes.

But they had to hand it out again to pay higher wages so teachers and nurses could afford to buy a home.

Property developers did well, but promptly lost it all in the bust. And we know what happened to the banks.

We're all learning a few lessons the hard way in this bust. One of them has to be that cheap houses are good news.


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