Months after the departure of the international bailout Troika, the Irish
Government through an authorised leak on Monday returned to an old electoral
reliable for politicians in trouble; housing/ construction - - with a promise of a new bank guarantee and
mortgages with a loan to value of up to 95%.
This may be hard to believe after the out-of-control property bubble and
huge damage of the recession with bust banks and the lives of hundreds of
With less than two weeks to the local and European elections, a government
official authorised to leak with the likely approval from the highest level,
told political correspondents of the mainstream media that the Government
is planning to introduce a new scheme, whereby a portion of the mortgages to
first-time buyers of new houses will be guaranteed by the State, in order to
allow banks give out more loans.
The official said similar schemes are already in place in Canada, Australia and
the UK - -
the leaker unlikely warned that the British “Help to Buy” scheme is widely
viewed as spending on vote buying.
Sharing of the risk will be undertaken through a government mortgage insurance
scheme and the plan will involve the State taking responsibility for 10–15% of a
loan's value, the deposit covering approximately 5%, and the bank being liable
for the remainder.
The bank will assess a candidate's suitability for a loan as normal, but the scheme may make 95% mortgages more widely
On the supply side
the authorities are impotent an reform of the corrupt land
rezoning system that makes development land scarce in a country that is about 4%
urbanised, is a taboo issue as jellyfish
politicians still insist on pandering to farmers.
During the bubble in Dublin, in some years, apartments accounted for more than
40% of completions while there was a shortage in houses for those who were
Site costs jumped from about 10 to 15% for
apartments in central Dublin in the 1990s to 40 to 50% a decade later.
In 2006 a global real estate agency compared the cost of a single-family
dwelling, 2,200 square feet (approximately) — four bedrooms, two and one-half
baths, family room (or equivalent) and two-car garage in neighborhoods/zip codes
within a market that is typical for corporate middle-management level families -
- in 384 markets including 42 outside North America.
It found that for the cost in Dublin of $1.4m (€1.1m), you could buy nine
similar houses in Houston, Texas, three in Amsterdam, two in Sydney and almost
two in Tokyo.
The biggest falls in prices after the crash were in the more expensive market
while sales of poor standard apartments with limited storage space and no
facilities are hardly meeting enthusiastic buyer interest.
So mortgage approvals this year on an annualized basis are at a 42-year low and
Dublin is facing a housing shortage!
Finfacts today: Irish home mortgages paid in Q1 2014 at lowest since 1972
-- Prices rose in Dublin by 14.3% in the year to March 2014
This is from The Irish Independent in May 2000:
The strategic planning guidelines constitute a mandate for continuing urban
sprawl which will create an ever expanding metropolis around Dublin at lower
density than any comparable urban area in Europe, DKM Economic Consultants warns
in its report.
According to Colm McCarthy, of Davy Kelleher McCarthy, the predicted number of
new dwellings will require that development occurs over an area more than twice
the size contained within the M25 around London, which has a population of eight
He maintains that suburban development at six units to the acre would
accommodate the required 165,000 dwellings in an area of 118 sq kilometers, or
seven miles square.
“The process of urban sprawl around Dublin has already spread throughout north
and mid Leinster, beyond even the large area envisaged by the Strategic Planning
Guidelines”, he warns. Due to speak at the Irish Homes Builders’ Association
convention in Edinburgh this morning, Mr. McCarthy suggests an alternative
policy by aggressively zoning and servicing all undeveloped land within ten
miles of the city centre for housing and mixed-use development."
Ronan Lyons, a Trinity College economist who
prepares the Daft.ie housing market reports,
Shifting out demand to encourage supply seems to me to be like adding fuel to
the fire in the hope that the fire brigade are more likely to turn up. The
losers will be the very people the policy aims to help, first-time buyers who
will be given more credit to bid against each other.
What is particularly disheartening is that it comes so soon after Ireland tried
this before and it went so spectacularly wrong - while house price growth from
1995-2001 was driven by a combination of factors (including incomes growing
faster than supply), house price growth 2001-2007 was driven almost exclusively
by easy credit and that was where the damage was done."