Join the dots

There are some days when political myopia and an inability to join the dots is particularly difficult to accept. This is one.

On the one hand, we have the Simon Community’s latest annual report:

Over 1,400 people are forced to seek shelter in emergency accommodation in Dublin every night, according to the charity [Simon]. It believes there is little hope for these people of moving on to somewhere of their own in the long term, with at least 50% of people now stuck in emergency shelter for more than six months. The problem, it says, lies in the collapse of the private rented and social housing market, with additional housing also slow to come on stream.

On the other hand, we have these decisions from Dublin’s local authorities:

Dublin homeowners, the State’s biggest payers of local property tax, will have their bills cut next year, following the decision of councillors in three local authorities to lower the tax by 15 per cent. Dublin city councillors last night voted for the cut, despite warnings from chief executive Owen Keegan that the decision could hit homeless services.

Dublin’s local authorities are foregoing roughly €40m on an annual basis with these measures. The back of my envelope suggests that this amount, if used as collateral/deposit of one third to borrow the other two thirds, could have perhaps provided for building 1,000 units a year. I suggest bringing this up with your councillor the next time they knock on the door, proclaiming the virtues of knocking €80 off your property tax bill, while also claiming they will take action on homelessness.

There are two additional bitter pills to swallow. Firstly, this tax rebate is probably the most regressive one that could be dreamed up, with Ireland’s wealthiest citizens benefiting the most and the poorest third of society gaining nothing. And secondly, Ireland’s left-of-centre parties (particularly those not in Government) led the charge on this. The mind boggles.

Blame cannot lie entirely with local politicians, it must be said. Narrowly, if central government hadn’t given them a target of 15%, and instead let them do whatever they want with their property tax, but live with the consequences, things might have panned out differently.

More broadly, there will always be a segment of society who cannot afford to cover the costs involved in their accommodation, so there will always be a requirement for social housing. The government has long abdicated its duties in this regard.


80 replies on “Join the dots”

It is an outrage. And indicative of how screwed up this country is. Where else on earth are nominally “leftist” parties opposed to property taxes?

What we live in is a plutocracy and every one of the political parties (no matter what sort of bleatings they may come out with from time to time) accept this as the natural order of things. Let the poor take the hit so that the rich are not discommoded in any way. Cut social services, education, health so that our betters in Dublin 6 can afford new German luxury autos every year.

This is not in the least bit surprising. The homeless don’t vote, those with homes do, and while people may support the principle of taxing homes when it comes to it nobody likes paying additional tax.
Rather than people bringing up the plight of the homeless on the doorsteps they are more likely to cheer on and enquire as to why the cut was not a 20% or more. If councils were in a position to cut water taxes they would do so also.
We are living in the early stages of the next general election campaign, and having told everybody that we have turned the corner government and opposition will now outbid each other as to who can deliver the most goodies

“Blame cannot lie entirely with local politicians, it must be said. Narrowly, if central government hadn’t given them a target of 15%, and instead let them do whatever they want with their property tax, but live with the consequences, things might have panned out differently”.

For the record. The govt permitted councils to vary the property tax by 15%. The responsibility for doing so rests with local govt.

You suggest that the councils lever up to build houses. Do they have this power? Would these borrowing be serviced and by whom?

Just because it’s easy to explain doesn’t mean it’s not depressing!

My understanding is that the Housing Finance Agency exists for this very purpose, although I’m happy to be corrected on this. If I do indeed need to be corrected, then there is definitely something wrong with our social housing infrastructure, as the underlying collateral – a human right to shelter – is pretty strong.


HFA is not the county council. I would not trust local govt here with the power to borrow money for capital purposes. It is a bit early to give them the national credit card.

The big problem is supply, supply and supply. Look to NAMA to fullfill their promises in all their press releases.

We might have crossed wires here. This is what the HFA does:
“Housing Finance Agency provides loan finance to local authorities and voluntary housing bodies for housing and related purposes. The HFA raises its funds on the domestic and international capital markets in structures and at costs that reflect its customers’ requirements.”
I’m not sure if you think that constitutes giving them the national credit card or not; it is my understanding that HFA is “off-balance sheet” like NAMA.

Why is this small reduction in local government income claimed to be so directly related to cuts in services for the homeless, of all the expenditure controlled by local councils? It seems likely there are many other things that could be cut, and this comment from Keegan is more likely part of a posing-draconican-consequences-to-any-mooted-cuts-in-my-budget circus so well-known in Whitehall and elsewhere.

I personally agree strongly with the City Council’s decision, which goes a small part of the way towards recognising that the cost of providing services per unit of value of residential property is much lower in Dublin than in most of the rest of the country. I would like to have seen it accompanied by a cut in commercial rates and parking charges.

Finance from the LPT is not the only lever that can be applied to improving the availability of homes for the homeless. A key medium and long term measure should be managing the planning system in Dublin to ensure an adequate supply of houses, and thereby to manage median home prices to an affordable level. A key short term measure should be, recognising that the big bang change in standards for private residential rentals has had a catastrophic impact on housing availability, to roll it back and reintroduce it only incrementally.

I find this truly hilarious. The way all these loopy-left political parties keep promising ‘socialist utopia’ then, when they find out what their constituents really want (ie low taxes), they fall over themselves to accommodate them. Not only the hated property taxes, bit the water tax, and corporation tax.

The root cause of the problem is that far too few new houses are being built. I dealt with this in the other thread and won’t repeat here. But, when FF were in power, the Galway tent was up and running, and builders and developers were in the ascendant, there was no housing shortage and virtually no homelessness.

Regarding the plight of the homeless, there is no need to impose savage taxes on hard-working people. Let the Government get its priorities right. The Government spends 50 billion in Ireland annually. If they can’t prioritise so that the homeless get looked after, its their fault. Why not scrap the useless Constitutional Convention and the plethora of referenda planned for next year, and use the money for the homeless instead?

As for Dublin City Kommissar, Owen Keegan. If he’s so skint, why didn’t he allow the Garth Brook concerts to proceed? Typical loopy-left eco-loon socialism. Prevent perfectly legitimate economic and commercial activities that generate revenue, then try to ‘compensate’ by punitive taxes on hard-working people.

In what way is the Local Property Tax local?

LPT is collected by central govt’s Revenue Commissioners. While in theory up to 80% of the tax is retained locally, central government funding is being reduced to any local authority that is judged to have too much LPT paid in its area. So effectively this is a tax on living in an urban county, the proceeds of which are paid to those living in more rural counties where services cost more to provide due to economies of density.

It is a local tax in so much as people in one locality pay for people in another. This type of transfer would be better handled from the proceeds of general national taxation as the effect of LPT is to incentivise unsustainable housing patterns.

I take your point about 80 % rule . Would you prefer to see a situation where 100% of LPT was retained by a county to run its own affairs?

I would prefer if LPT rates were set locally and spent locally. Local residents could then vote for local representatives according to their tax and spend proposals.

Rural subsidies would be paid out of VAT, Income tax, Corp tax and excise.

Have a look at this chart of LPT revenue per household in 2014

This is what comes of centrally setting a single national rate of 0.18% for every local authority. A teacher in Dun Laoghaire doesn’t have four times more disposable income to pay property tax than a teacher in Waterford.

I would have preferred a locally variable site value tax as in the FG and Lab manifestos and in their Programme for Govt but this was abandoned following advice from civil servants that such a tax was too novel.

The homeless are definitely off balance sheet.

This is just a tax cut for property owners, a goodly number of whom, particularly BTL, don’t even bother to pay for property that is in their name.

@ Ossian Smyth

Given the controversy that charging for waste collection from the 1980s triggered, even if there was a lot of discretion given on the LPT, wouldn’t the central government as the main funder have to say what ex-LPT funding it would provide?

As there are no household rates or a local income tax, many residents in an area would likely support local politicians who would offer a free lunch.

On a general point, the only real power left with local representatives by the county/city management system was land rezoning and the record hasn’t been very impressive.

@ Otto

One assumes that the official in question would not be in the position he is in were he politically naive. His comment reveals what can only be described as the fraudulent posturing of all those local representatives who voted against his proposal but of Sinn Féin in particular.

As has been commented on above, the LPT is not a true local tax and the basis on which it is calculated is clearly not the best. But the haste of the vast majority of the representatives to act in the manner in which they did suggests that they believe that the vast bulk of their electorate, across the social spectrum, agree with them; those – a high proportion – that are property owners, that is.

The President speaks:

Dublin Simon is the latest in a line of charities including Merchants Quay Ireland and The Peter McVerry Trust which work with rough sleepers, drug users and the homeless to warn of the extent of the problem despite promises to end homelessness by 2016 only made last year.

President Higgins said: “I’m a believer in public housing, in public housing in relation to rental as well, because that’s what we need. You need to get the housing right if you are going to take the first steps towards equal participation.

”Meanwhile, Mr McGuinness warned that temporary accommodation was now becoming a long-term solution with at least 50% of people who are seeking a permanent home now stuck in emergency shelters for more than six months.

On rough sleeping in Dublin city, Dublin Simon said a volunteer group counted 158 people on the streets on one night last week, 24% more than the official count last April.The charity said that figure should be seen as the absolute low, as it does not include people classed as hidden homeless who are sleeping on sofas, staying in squats, in hospitals, hanging out in 24-hour internet cafes or paying for B&Bs. Mr McGuinness warned that a target set this year for 1,100 tenancies in Dublin has been slashed by one third.”It is blaringly obvious that thousands of vulnerable and frightened people are being trapped in the revolving door of inadequate and insufficient emergency accommodation, forced to remain roofless,” he said. –

Ronan, those evidently aren’t the right sort of dots…

“Commenting on the proposed new direction for Nama, a senior government source told the Sunday Independent: “We haven’t been able to find a workable model to raise the finance for social housing. It’s a plan that involves investment in the billions, which the Government cannot borrow.

“Now the light bulb is going off in everyone’s head. Nama is available; and it’s off balance sheet so the Europeans can’t give out.”


Book Review: Spatial Justice and the Irish Crisis (, eds: Gerry Kearns, David Meredith, and John Morrissey, Royal Irish Academy (2014)

The chapter by Prof Danny Dorling, Professor of Geography at the University of Oxford, on Spatial Justice, Housing and the Financial crisis makes important links between rising inequality and housing crises internationally. This chapter is very interesting for an Irish audience as it highlights how the current housing crisis in Ireland has similar causes to other countries and there is much we can learn in regard to social justice based responses. Dorling argues that “we really need to think of housing again as a way in which we feel safe about where we are: not as a source of investment or a pension or something that can be used for profit, but instead as primarily a source of shelter”. He offers suggestions to address this such as a mansions tax, rent control, and using second and third homes for housing for those who need it. He explains that “housing is fundamental. It is what lies at the bottom of this crisis. Housing is one of the basic things that everybody needs and that policies can work out a way to guarantee.” He surmises that the reason this is not the case is because current policy appears to be ”trying to protect the equity interest of a small proportion of people who happen to own quite a lot of very expensive housing”.

The Chapter on Spatial justiceand housing in Ireland, which I [Rory Hearne] co-authored with Rob Kitchin andCian O’Callaghan, details the catastrophic fallout of the property crash and its socialand spatial repercussions for households in Ireland. It analyses how, during the Celtic Tiger period, housing policy in Ireland wasincreasingly neoliberalised and the privatization of social housing and therolling out of PPP regeneration schemes in many instances served toerode existing social housing infrastructures. It critiques the failure to alter the fundamentals of how the Irish housing market is constituted and works, and the assumption that future housing will be the preserve of the private market and the benefit of private interests. The current housing system is not only inherently unequal, but now fundamentally unfit for purpose and perpetuates and entrenches social and spatial injustices, making them increasingly difficult to dislodge. Through the Celtic Tiger many communities in our large cities and rural towns were excluded. Similarly in the crisis and ‘recovery’ places are affected unevenly with significant spatial inequalities remaining. The danger is that the imbalanced spatial and institutional landscapes deposited by the crash, left to the whims of the market, will calcify into a nation increasingly characterized by geographically uneven development. Echoing, Dorling’s conclusions, the authors highlight “the need for (and indeed right to) decent social housing cannot be questioned given the housing waiting list figures and the high dependence on rent supplement”. Providing social housing and regeneration can be a win–win scenario we claim, as “delivering it on a large scale offers the potential for real economic and social stimulus for local communities and for the wider society and economy”. Finally, it is clear that “the ideological opposition to social housing and obsessive support of the private rented and property market must be put aside to develop alternative approaches that place the primary value of housing as a home and a right, and not a commodity.”

Anothher Dub!

Incidentally, Wittgenstein made four short trips to Ireland before he gave up his professorship in Cambridge and went there to live. In all he stayed in Ireland about two years, living in Redcross in Wicklow, at Rosroe in Connemara and in Ross’s Hotel (now the Ashling) on Parkgate Street in Dublin. There is an informative account of his visits in Wittgenstein in Ireland, published by Reaktion in 2000.

Blind Biddy is a fan! IMHO the pints in Parkgate St. were seminal in his turn from The Tractatus to Philosophical Investigations – thankfully, he did not need the rent allowance!

Grumpy (ca bhfuil sé? ) had a good point there a while ago which is germane to this discussion. The older PS employees who defend to the hilt their salaries were in many cases also the ones whose kids are emigrating. Only connect.

And it’s similar with house prices. The boomers and pre boomers who can talk again about their house prices in Dublin are in many cases the ones whose kids won’t be able to buy houses due to the wider political economy.

Una Mulally, a very talented journalist , had a brave and insightful comment in the IT recently :

Many of us in our 20s and 30s now, like myself, exist in a freelance environment or in temporary employment or on a contract basis. Insecurity is built into our employment market. Being kept on one’s toes can often spur one to be better, work harder and take on several gigs at once, learning more and being more versatile – having “transferable skills”. But it is also a relentlessly stressful way to exist and earn.

Sinn Féin’s urging the government to invest nearly a billion euro in a new housing programme.

It wants to let councils have access to the Strategic Investment Fund so they can start building new homes. The party believes a €1bn investment could build 6,600 homes.

Sinn Féin’s Dessie Ellis says the housing crisis demands urgent action. He said something must be done to deal with the growing numbers on council housing lists.

“This is a housing crisis – we’ve 89,000 people o the housing waiting list – [that] represents several hundred thousand men, women and children,” he said.

“Recent figures from Focus [Ireland] says there’s 5,000 people homeless, and we’re having people queuing up at hotels … this is scandalous, and we need to address it.”

“We need to turn back the tide on government policy which has left over 100,000 in housing need, 10,000 seeking services from homeless charities and hundreds sleeping rough. We need to provide housing and we need to start now,” he said.

@Ronan Lyons

Since I believe you lived in Oxford until recently, perhaps you could tell us how you find house prices in Ireland (that is, Ireland as a whole – not just Dublin 4) with Oxford. The BBC website gives a figure of £340,864 (415,000 euros) for the average house price in Oxford. I doubt if the average house price in Ireland is even half that. The reality is that housing in Ireland is currently dirt cheap, outside of a few areas in south Dublin, and even there its much cheaper than in similar areas in UK.


Sinn Féin’s urging the government to invest nearly a billion euro in a new housing..

No objection to that, but private sector could do job at least as well. The real question is why new house building was allowed to fall to such low levels. The answer to that is that wild exaggerations of the surplus of houses, wild exaggerations of the likely fall in prices, plus media/academia/politicians demonisation of the construction industry totally undermined it. Ireland urgently needs its builders and developers to come back. If that upsets a few loopy-left types, sod them.


‘… private sector could do job at least as well.’

The neo[ordo]liberals and the propagandists of the global and very local financial system takeover have polluted the ‘real’ distinction between ‘public’ and ‘private’ sector economic activity: as Seven_of_9 put it to me recently, ‘it is extremely unwise for the private to dominate in all sectors of civilized life – the road to slavery’.

Ask the city manager why he and the other managers in the Dublin area going ahead with the poolbeg incinerator that will cost large amounts of money that the people paying the LPT will have to pay for many times over through all the different taxes that they pay for services, like helping the homeless. Welfare for the poor is an easy target while projects like this which we always end up paying for by giving the companies running them handouts because they fail to reach the unreachable targets set for them at the start. (Think the N4 or the limerick tunnel.) There is the money to help the homeless, leaving the country in the pockets of the corporates that sold the county a pup in the guise of Public Private Partnerships or as it should be called Corporate Welfare. Now that might be more worth your indignation then cuts in the unfair and unjust LPT Ronan.


Why is the UK a barometer for where housing prices should be? As you said yourself, it’s a country ran for/by Etonites and soaring property prices in and around London suits those boys just fine. Screw everyone else mind.

You seem to rejoice at the (disputed) competitive gains we’ve achieved. Are you not then disappointed to see such run away inflation in the property market?

Why is rent/property prices excluded from ‘competitiveness’?

First the local gov’t should not be solely responsible for social housing. In normal countries the national government dictates to the lower gov’t what their responsibilities are and in areas where demand is portable the national gov’t cost shares to the extent of 50% or more. The homeless can move therefore there is a tendency for Councillors to believe that by having poor quality shelters they will force the poor elsewhere. Similarly when schools are funded out of local taxes it is necessary for the national government to cost share so as the local government does not adopt measures hostile to families with children.

Lower taxes and higher wages for the better off is so Reagan/Thatcher and reminiscent of the 1980’s. Remember when TDs justified their higher incomes on the basis that if the electorate wanted good gov’t we would have to pay for it. They got the pay and now we pay dearly for their incompetence.

Life is not as simple as economists would like to believe.


I don’t particularly focus on UK, but (a) its closest country to Ireland (b) its Ireland’s largest competitor (c) its easier for me (as I don’t speak European languages) to get data for UK. However, I agree other countries should be included in the mix when measuring Ireland’s competitiveness. That’s why, a few weeks ago, I asked posters on this site, who live abroad (and there are many), to post information on house prices where they live. Only Francis did, and his figures seemed to suggest that house prices in Germany (itself a relatively low-house-price country) were higher than in Ireland. All the data from different sources (Demographia, Eurostat) tell me that currently house prices in Ireland are extremely low in comparison with countries of similar GNI (western Europe, U.S. Canada, Australia, New Zealand). But, I am willing to be corrected if posters living in those countries post in figures showing otherwise. That’s why I was interested to hear what RL had to say as he lived in Oxford. But, equally interested in hearing from people living in other places. Have to say that the very sparse response to my requests for info itself tells me something.

As far as I know, house prices are included in many measures of ‘competitiveness’. It simply depends on which measure you take.

Regarding optimum house prices, and whether rising or falling house prices are good or bad, its not a one-way street. A balance is needed. House prices shouldn’t be so high that competitiveness is badly effected. That was the case in 2007 and a correction was needed. But, neither should they be so low that builders don’t build houses, construction workers are unemployed, and a housing shortage develops. That’s the case now. All the evidence is that, while a correction was needed in 2007. the one that occurred was much greater than what was needed. The Economist magazine (and others) stated back in 2007 that a correction of 20 per cent was needed. However, driven by the hysterical predictions of a few economists in Ireland, who predicted 80-90 per cent and completely undermined the market, the actual correction was 50 per cent. This was massive overshoot. The result of this overshoot is predictably very little new house building and growing housing shortages. Prices are now scrambling back. Hopefully, this in itself will induce builders to build and eventually eliminate the shortages. I estimate they need to rise to a level equal to that of the post-2007 correction that the Economist (and others) said was needed back then. That is, they need to rise to about 80 per cent of their 2007 level. This would still be very competitive. My analysis is based on studying the limited figures available. However, as I said above, I am willing to change my mind if posters living abroad post in figures showing house prices are currently lower in the countries where they live than in Ireland. So far, no one has done that.

Hi, John, bit early, but you do read the rubbish (about private residential housing) you write?

Its nay prices John, its what the house lenders want/need to lend out. And prices of res Irish residential properties have nothing, like nothing, to do with comparative competitiveness with overseas residential properties.

There are those Golden Rules of Mortgages (for private residential properties – for your home to live in). Look ’em up.

And you might also ‘analyse’ why the mortgage default rates for Irish residential property loans (not the BTL sector) is near 20% – whereas when the above Golden Rules were adhered to, the default rates were <1%. What happened?

And of course, disposable incomes have nothing, like nothing to do with the ability to service ones debts? Naw – just hysterical posturing!


You might want to look the economist house price data, before you decide that Ireland can be competitive with Germany, while allowing (deliberately) stratospheric house prices increases and drops.

Your comparison with UK, with its South East flush with oil-gotten gains from abroad, makes no sense.

PS: Average house prices in Wales and Scotland are around £STG175,000.

The housing market in Ireland has been manipulated by land hoarding, mostly on this occasion by State institutions (banks included).
Qui bono?

@BrianWoods 2

If you think house prices in Ireland are overvalued, how about these?

A nice selection of houses in Stoke, mostly around £240-£250 (300k euros).

They don’t seem particularily grand to me, but their average price seems to be about two-thirds higher than average price in Ireland currently. And its Stoke in the depressed Black Country, where no Russian investor has ever set foot, not leafy Oxford, Cambridge, Kensington or Surrey, where prices are much higher.

@Joseph Ryan

If the average house price in Scotland and Wales is £175k, that’s about 25 per cent higher than Ireland average (I agree Dublin average is above Ireland average, while outside Dublin average is below Ireland average, but similar urban/rural difference exists in Scotland and Wales). And, of course, Scotland and Wales averages are below UK average.

Demographia put ratio of median house price to median household income at 2.8 in Ireland in Q3 2013 (3.7 in Dublin, around 2.0 outside of Dublin), compared with (going from memory) around 3.5-3.8 in U. States and Canada, 4.7 in UK, 5.5 in Australia and New Zealand). OK, prices up since then, maybe 3.0-3.1 in Ireland now, but up in the others too.

But, I repeat. This site has posters from UK, France, Germany, Sweden, Netherlands, Belgium, Switzerland, Norway, Denmark, Finland, U. States, Canada, Australia, New Zealand. Let them post in prices of houses where they live. If some poster can show that his/her house in London, Edinburgh, Swansea, Southampton, Nottingham, Newcastle, Copenhagen, Helsinki, Uppsala, Bordeaux, Geneva, Munich, Helsinki, San Francisco, Perth, Sydney, Toronto, Calgary, Auckland, Christchurch, Berlin, Frankfurt, Ghent, Toulouse, Maastricht, Hamburg etc etc is currently valued cheaper than a similar house in Dublin, Cork, Galway, Waterford or Limerick, then I will gladly accept what they say, and might even buy it from them.

I find it hard to believe that the median household income to house price ratio is as low as 3.7 in Dublin. There is massaging going on there, the usual Irish political twisting of facts. Perhaps it is the homeowners household income to house price ratio. The highest I ever saw reported was Geneva at 12 to 1 during a past flight to safety. At the time the Swiss were quite hostile to foreigners (even tourists) much like what is happening in Vancouver now. Statements in the Vancouver press that Richmond(leafy suburb) has more families in poverty according to tax statistics than other places because the Chinese are engaging in widespread tax evasion.

@ JtO your last post was possibly intended for the senior version of the genre

On the topic, it seems to me that things like helping the homeless should definitely be a central government responsibility. Imagine if dole rates were decided locally.

By the way the waiting list for social (subsidised family) housing is eight years in Toronto. Emergency shelter is available immediately at all times particularly when temperatures drop to -28C in late January, early February. Mayor Ford a proud Irish descendent is famous for the phrase “I may have smoked crack cocaine when I was in a drunken stupor but I am not an addict.”. This just before he went into two months rehab.

There are priorities with mothers of young children and the handicapped getting preference. Subsidised old age homes are common. Able bodied single men are at the bottom of the lists.

@Brian Woods II

Yes, you are correct. Sorry about that. Very confusing having 2 people with same name, especially so early in morning.

@ All

Hithertofore I have been known as Brian Woods II. Henceforth, I will be The Second.

@ Ronan Lyons

If you are asking how much could an extra €40m p.a. build as a one-off, the approach is not to ask how much leverage can you get out of one year’s deposit but how much of a loan could €40M per annum service. You would get closer to Sinn Fein’s 6,600 units by that approach.

Until a few months ago 100% of funding for the homeless and local property service provision came from central funding.
I knew that the idea of the Property tax was to pay for property services mainly through the local authority but if if it was always explicit it would include provisions for the homeless I missed the memo.

I have to give credit to Owen Keegan what an extremely clever way to announce that homeless funding will come directly from property taxes.
No doubt the government are delighted that they will be able to reduce the current subvention from central funding even more.
“despite warnings from chief executive Owen Keegan that the decision could hit homeless services”
I think Mr Keegan pulled a clever ‘fast one’ here and many of you seem to have bought it.

But a few questions emerge.

Is it right that the the level of homeless provision will be based on property tax receipts in a particular council area?
Do we want homeless provision to be controlled by the whims of a county manager in each council?

Oh and strangest question of all. Could this lead to a type of homeless tourism because some council have better provisions made than others for homeless services?

I think part of the problem with rising house prices is that the market is not what it was 20 or 30 years ago. I wonder if the public’s view of housing investment has caught up with the changes.

You had a very different ecosystem – banks and building societies, mostly local, a lot of them run by Protestants, prudent, had plenty of margins and they lent accordingly. They had an interest in the stability of their organisations because they gave a sh*t.
The neolib revolution turned up and the Building societies were merged into the banks.

AIB sold their own HQ and bet the money on the housing market in 2005 I think. WTF

In October 2008 Greenspan told the NYT

“I made a mistake in presuming that the self-interest of organisations, specifically banks and others, was such that they were best capable of protecting their own shareholders.”

Now the banks are on long term medication that makes them dozy.Who is lending the money now?

CBs have tried to get volatility under control and capital
markets are full of one way bets but they may not be able to manage the transition back to exit velocity.

Given the structural changes in the composition of lenders and they way they run their businesses I would expect more house price volatility in the future than was the case 30 years ago.

In Ireland it was an article of faith that property values had never declined in Ireland. When I pointed out all the property bubbles that had burst in Europe and North America I was accused of begrudgery and told that I should have more faith in the Irish. What you have now are like fervent Catholics who have found out that the Blessed Trinity is cursed and Mary was not a Virgin. Their belief system is shattered and it will take more than 25 years to approach normality. A period of ten years or so 3%+ inflation would help enormously. We have wasted 5 years now and it is not likely we will have 3% inflation in the next 3 years. The prime spenders, people in their 30s’ and early 40s’ are drowning in debt with no Life Buoy in sight.


Hard to get a like for like. Of course there is the context of historically low interest rates and consequential flight to ‘safe’ assets across Europe. So just because prices are similar elsewhere doesn’t mean they should be the price they are here.

Also, why do prices need to increase to make property building more worthwhile? Why can’t land or labour costs decrease?

If we take Berlin and Helsinki:

Berlin (on average) is about 2,596 per sqm: (apartment)

Berlin property/rent is definitely cheaper, by maybe 10-20%. Though experiencing high (but not as high as here) inflation. Way cheaper when you consider the better quality of apartment accommodation, cost of living on nearly everything and better services.
Helsinki, about 3,600 per m2 (and falling) for the greater Helsinki Area.

Helsinki has better services, cost of living is significantly cheaper on families (child care, health, electricity, university are ‘free’/cheap) and better quality accommodation, though at the moment on rent/prices as expensive if not more expensive than Dublin. Though they have been falling of late.

The greater Dublin area average is probably around 3,500 per sqm (and rising rapidly) at the moment. Though it is hard to find sqm numbers, so I’m open to correction. If one could find the average property size in the greater Dublin area it would be easier. Perhaps R.Lyons can help?

Of course this is a comparison of apartment city living, which, I know you’re not a fan of. Though the majority of the world live in cites and most of them in apartments.

Factors in favour of Ireland having cheaper accommodation:

1) One as to factor in the cheaper credit in Finland/Germany. They don’t need to subsidize trackers there. So that should, for the moment at least, mean higher prices there. They also have better employment figures than Ireland.

2) Incidentally, over half of the property sales since the bottom have been bought by (presumably wealthy) cash buyers, a lot of whom, as well as benefiting from the capital appreciation, have been gifted a capital gains sweety by M.Noonan. Which may take some steam out of the market IF it’s allowed lapse in the budget.

3) High unemployment in Ireland.

4) Wage stagnation (probably an issue elsewhere too though).

On the other hand factors in favour of higher prices here are

1) Legal. property purchaser know if they don’t pay their mortgage on their principal residence and/or BTL here there’s a low down side, as we’ve seen, chances are they’ll get to keep the property.

2) Property owners can kick a tenant out on the street with 4 weeks notice here. Something that would cause a riot in Finland/Germany.

3) Unlike in Germany (and to a lesser extent Finland) property price increases have political support here. The Minister for Finance in Germany would never come out for property price increase in Germany. Price/rent inflation above and beyond wage inflation is seen as a problem there, for obvious reasons.

Anyway if the question is how much should property cost? In my world it would be whatever the price is when you strip on speculation and add enough supply to the market. We make little effort to strip out speculation, in fact we encourage it.

I don’t accept prices have to increase or had to increase to this level. More supply could come on if land/labour prices reduced or if government intervened with policy or capital (to build).

@ The Second; Noted, thanks.

I think both Yields or Bust and Myself have ploughed over this matter of ‘affordability’ of Irish private residential mortgages on several previous threads on this site: the matter ought to be settled. Its so pathetically simple to understand that a pigeon would get it first time. But no, it just keeps coming around like a demented comet whose gyroscope has gone haywire.

A lender must never lend more than 2.5 times a single salary, NEVER, NEVER. There are a few more rules here. But they will keep. If the lenders disregard this multiple, then the probability of mortgage defaults increases exponentially. And I just have this nasty suspicion that that is where were are now. The residential property mortgage default level was always <1% – its now twenty times that! Are folks here stupider than those Tuilpers in the Low Countries? Sure looks like it.

We had a property asset bubble (over a 12 year span) which saw residential property prices increase by 350%, that's not a mistake folks! – 350%.! And how was this stratospheric level achieved? Go figure!

As Gavin K exclaimed the other day: "Christ on a bike!"

I had provided some German and US data,

and especially links,

but the problem was the anglo style median-price and the more central european price per sqm need to be translated.

I found lateron a link, adressing the sqm issue and an international comparison and provided it here for reference days later on a more recent thread

The important point made by Tl (“thats legal?”), you have to keep net vs gross salary in mind, especially when comparing gross vs net , the US

US tax rates are lower, health is paid by the employer, SSI retirement insurance is lower, but in the interesting locations (like NY, californica, not Kansas) you pay not just state tax on top of fed income tax but .local tax to the tune of 2-3% of property value, you can then offset against mortgage interest …..,, if you are employed : – )

Construction Cost 1,500 – all per sq m. basic without upgraded kitchen etc.
Levy 85
Design 150
Site Works 150 – 15,000 per unit
Site Purchase 500 – 50,000 per unit was c 200K at market peak
Dev Finance 119 – 12 months at 5%
Sub total ex VAT 2,504
Profit @ 15% 376
Breakeven Sales 2,880 – VAT has to be added
VAT @ 21% 605
Sales Price 3,485

Thus for a 95 sq m semi detached starter house we are talking about 331K to break even. Prices have to be around this level for it to be worthwhile. With competition profit may come back to 10%. Land at zero would bring it to 283K to breakeven. It seems a reasonable expectation to price something above the cost of provision.



“July 11, 2014 11:29 pm

Modernist economists, take note

From Prof Sheila Dow.

Sir, Mark Wolfgram’s letter (July 5) on modernist ideology applied to architecture calls to mind the form of modernism to be found in much of economics. One feature is the aim to seek uniformity in economic analysis. Another is to achieve this by relying on formal mathematical models. The resulting policy prescriptions (such as budgetary rules) are presented as having universal application, with technical justification supposedly independent of any value system. Modernist economics is presented as “scientific”. Yet this modernism has been the subject of critiques from a wide range of perspectives of which postmodernism is only one.

First, any assumptions in models about individual behaviour and social structures cannot avoid incorporating value judgments. Thus, for example, an implicit ethical position has typically been taken by modernist economics on means and ends, including the social acceptability of calculative atomistic individual behaviour. Second, even the most sophisticated formal modelling has to limit its subject matter to structures and processes which can be modelled and projected into the future. So any resulting policy advice needs to reflect those limits and requires careful formulation for particular contexts.

Therefore non-modernist approaches to economics which take account of evolving contexts by methods going beyond formal models have if anything a better claim to be scientific, while acknowledging the inevitable limits to economic knowledge whatever the methods used.
Just as modernist architects are enjoined not to impose their designs regardless of the needs of users, so modernist economists need to adopt more humility in making policy prescriptions.

Sheila Dow, Emeritus Professor of Economics, University of Stirling, UK “

What have the following countries got in common: Belgium, Netherlands, Denmark, Iceland, Norway, UK, Luxembourg, Finland, Portugal, Austria, Sweden, Slovakia, Hungary, Estonia, France, Czech Republic, Slovenia, Poland, Greece, Latvia?

They are just some of the countries whose property price to income ratio is higher than that of Ireland (according to this source: … ountry.jsp).

In fact, the only EU country with a lower price to income ratio than Ireland is Germany.

@Barry T

No wonder developers are rich if they are allowed to get away with those estimates you have produced.

Try the following
1. Try Construction Cost— 1200, which is still high (with profit in it)
2. Design Cost: Your cost for a scheme of 100 houses would allow a design engineer, a draughtsman and a QS a full year to do the work and earn about 1.5 million for same. $500,000 each, not bad for a few months work at most.
3. Site cost €50000 per unit at 8 houses per acre gives a land cost of €400,000 per acre. Whoop-de-doo. NAMA would be very please. Agricultural land is approx 12000 per acre. Nice profit for planning permission.
4. Profit. 15%. Bully for you.
5. Your site development cost is also very high, but ok.

Try some calculations based on what the people doing the work get paid, and agricultural land prices. The development levy is supposed to cover the services, is it not?
And profit of 10%, after covering finance costs, sounds more than adequate to me. Its building houses after all, not making rockets to go Mars.

Based on 1200 construction cost, land cost 50,000/ acre (8 units/ per acre) and 10% profit, I say you can sell the 95 sq mtr house for €210,000.
You may not be able to buy the chopper for next year Galway races, but you be able to drive there in a new 2015 Skoda.

The Irish gov’t has tasked NAMA to recover as much value as they possibly can from the distressed property they have possessed. From a political perspective it is important that property values appreciate so as NAMA can recover more. Any shortfalls must be made up by the Irish gov’t and with the election campaign under way appearances are paramount.

I see reports that residential property in Germany is up 10% year over year. With interest rates at historic lows and ample funds readily available this is not surprising. The German gov’t governs with the long run in mind (decades) while the Anglo Saxons have a 90 day horizon which the Irish have willingly adopted. A country dependent on exports has to have wages competitive with their competition. It is recognised in Germany that a workforce saddled with high mortgage payments will agitate for higher wages which being highly unionised they are likely to get. This is seen as the kiss of death by German exporters.
In contrast the Irish gov’t wants property price increases to serve its short term (1 year) goal of winning the next election.

Did Cuchulain, he of the short, adventurous and tragic life have a phrase similar to” long term strategy”. Or was it a case of himself alone using short term tactics.

300,000 for a 950 starter! Have we gone absolutely, stark raving bonkers? Are there no men left in Ireland? Apart from the ones with pairs of castanets between their legs! Dear God!

Looks like it. Sadly, reality and sanity do prevail. May take a while. In the meantimes, lots of folk will fetch a beating.


Vat should be 13.5% on building works. I would also agree that construction costs should be closer to €1000 /sq mtr, and profit of 8% should be adequate.

As you can see from the cost outlined by @Barry T, there is an enormous amount of profit gouging, particularly in terms of land (site) purchase, but also in other areas, including “development levy”. This “development levy” is being charged by councils for house ‘development’ a cost that is passed on to FTB’s (mostly). The same councils, this week, have decided to reduce local property tax (LPT) by 15%, a reduction that benefits existing property owners.
You simply could not make it up.

Regrettably, people in Ireland will only be happy it seems, until house prices go back to 2007. There are already at 2005 prices and climbing fast.
There has been been sweat and tears this time around. Next time we could have the third component.


Provider of mortgage insurance runs survey to boost claims for requiremnt to provide mortgage insurance. MMMMM let me think.

@ Joseph, Francis

VAT is correctly 13.5% of course.

The perception that good quality starter homes will be built for next to nothing is incorrect. Construction prices are rising – you won’t get much in a house for 1,000 per sq m (if you have the strength of your conviction I suggest going off to insure your house with a rebuild cost of €1,000 per sq m) The complexity in delivering large estate type developments requires properly resourced teams with professional designers etc. that need to be paid a proper fee – the new building regulation certification requirements are onerous and all the work has to be properly certified.

Targeting only 8% mark-up on costs would be brave given rising input costs in the construction industry being reflected higher price to do the work with 3-4% construction cost inflation being currently experienced.

Have a review of the development contribution schemes for a council and see what it actually covers, mostly in connection with new infrastructure – capital contributions will be required for utilities connections – agricultural land will need quite a lot of input to make it ready to go and has to be zoned for residential use with access roads etc.

On mature reflection, if you could build quality for €1,300 per sq m, pay €5,700 per house all in for design fees and certification, be happy to take €16k pre tax (8% mark-up) per house for probably 2-3 years work then the 95sq m house could be built for c. €256K. My experience is that real costs are above these levels and that expecting to get a return based on this cost model would be risky.


I know an FTB that has been refused by both AIB and BOI.
LTV approx 65%. Contract position.

Key question on interview: What would you if you lost your job?

Possible answers:
Walk down to Kildare Street and look for a bailout.
Work in a country, or sector, where nobody ever loses their job.

Frankly, I would fillet the directors of both banks, particularly the so-called public interest directors of AIB; the ones who decided to bung one billion of the bail-out money into their own pensions.

Do I believe Charlie Weston? I would certainly believe him before I would believe the time of day from any person from either AIB or BOI.


My reading of the index is that most countries have a higher (sometimes significantly higher) property price to disposable income ratio than Ireland (admittedly based on notional comparative apartments).


Don’t get me started on journos…..even worse than economists.

My point is that this survey was done at the behest of Genworth. This is a company that offers, inter alia, for a fee a mortgage insurance product whereby the purchaser buy a house with a mortgage (75% LTV) a top up secured by Genworth plus a small deposit (5%) The bank, I guess lends the 95% and if there is a default the house is taken as collatoral and the insurance policy pays out. My point is that they are not dispassionate.

The mortgage market in Ireland is disfunctional. New Mortgages are horrendously mispriced because the lending is now basically unsecured as the bank cannot get the collaotoral. If the consumer could pay the proper level for the risk the rate would be about 10%. If not the case, really good customers will get a mortgage at 5%. Think of it as rationing.

@ JR

Do AIB and BoI have that much to lend?
I wonder who is actually lending money to FTBs.

“Mortgage drawdowns in RoI in Q1 2014 were c. 50% higher than Q1 2013 and approvals also increased. There is also traction in our Online Mortgage proposition with in excess of 1,000 applications through the bank’s new online system. Overall, including the UK business, lending drawdowns by customers were c.60% higher, at c. EUR1.1bn in Q1 2014 compared to the same period in 2013. Notwithstanding the increase in drawdowns, the pace of loan redemptions continues to exceed new lending demand although the bank expects this trend to reverse in the medium term. “


your numbeo table is garbage. Nobody can pay 400 %of his income for the mortgage.

That is not your fault, nor of numbeo. It is actually a laudable effort, I myself have put in data there twice.

The food and other consumption data, AS FAR AS I CAN CHECK, pretty closely represent my knowledge (US, DE more detailed, long term, other places thin)

My ASSUMPTION is, that the people put in honest numbers also for houses, BUT most of them are students / starters with low income

the deloittte link (page 14) in the “insidious ireland” link I gave above gives you scrutinized home price / income ratios for many countries.

Barry T

I assume that your are , or at least close to, a developer, and that your data reflect the present situation IN IRELAND. Over 90% of the cost you personally have simply no control, so this is not meant as personal in any kind : – )

but your 3500 Euro / m2 to my 2000 simply reflects that there is still a lot of fat to trim in Ireland.

Useful links for home sizes

and to link Ireland to that


In Dresden you can now get a 15 year mortgage for 2.1% with a LTV (Loan to Value ratio) of 60% (se sz-immo link above)
Because of that Condo prices have now nearly doubled from 1147 Euro/sqm in 12/31/2008 to 2178 today. A bubble ? In Germany ? : – )

Talking about disfunctional markets.

My conservative father did a lot of renovations last year, and a photovoltaics, and a car, and was just a little short on cash. Most of my money is in pre 2008 stock, which I do not want to sell for tax reasons (no cap gains tax for pre 2008 so far !, compare “socialist Germany” to “capitalist US on that, ROFL)

He never took out a “consumer loan” in his whole life. I just told him to get a quote from his local bank, and then he comes back half an hour later with the money, unsecured for 2.1%


AD Aggregate Demand is stoked to craziness in the moment in Germany

@Seafoid / Tull

“Do AIB and BoI have that much to lend?

Very hard to square the figures produced by Charlie Weston (even with the small caveat that @Tull has mentioned) with AIB’s recent mortgage advertisement claiming that 4 out of 5 of all mortgage applications are being approved.
If you were in the Central Bank, it seems to me that you would want to know who was getting access to the supposed scarce capital. Grey haired old rentier types or young FTBs. In fact if you were an interested public director in one of the banks, you might, on a good day, express a little interest in that matter; before you collected your fat fees cheque and travel expenses.

I suspect the trend from the last CSO report towards a tenant society has gathered pace.
“The Central Statistics Office today released the latest publication in its series of Census 2011 results, showing that the number of households renting their accommodation increased by 47 per cent since 2006 to stand at 474,788 in April 2011 and leading to the overall home ownership rate to drop sharply from 74.7 per cent to 69.7 per cent.”

Of course we now have the tax-incentivised REITs in the ring, capable of outbidding any buyer, and further fueling the trend to a tenant society.

As to who is getting the scarce capital and who are getting their loans attended to, this weeks political shenanigans should leave nobody in any doubt that being a loyal party supporter can often pay unseen but substantial dividends. Morgan Kelly was right, having the correct party ticket is now more important than ever.

Up to last year the country was being ransacked through firesales, mostly to foreign buyers. Now it is being ransacked from inside, by the the quaint methods of “rationing” by banks, driving up rents to benefit landlords, and hoarding building land.
Joyce was right ‘The sow that eats her own farrow’.

@Barry T / @Thats Legal

Thanks for that. after a bit more negotiation we could get the point where ordinary people might be able to afford to live in the country.

Clearly the big issue is site cost, with the State, NAMA, banks, receivers, etc now looking to make up their loan losses by hoarding supply.
As I understand it a solution was proposed back in the late 1960, the Keane report I think.
But Ireland prefers the opportunity of corruption, and boy, did we get loads of that. The price of that corruption has been paid by house buyers and by having a less competitive and complete society.

My advice to that person refused a mortgage on a 65% LTV,by both AIB and BOI, is to get to f$ck out of the country and stay out.

@Barry, Tull, etc

There are a couple of other factors.

One is the now Pavlovian expectation of volatility in the price firstly of land and secondly, of labour costs. In a country where players had been conditioned to expect land prices to be dull, boring and predictable one might expect focus to move onto efficiency, and the industry to gradually become more adept at building sensible things as cheaply as possible to a fairly common standard. In Ireland developers are looking over their shoulder at all sorts of likely cost volatility and the important business decisions are too often about whether to bank land or not or whether to commence projects or not.

The sudden conversion from unregulated (supposedly self-regulated) to the other extreme is an additional cost base.

The other is the programming of expectations of the ‘value’ of land. In Ireland re-zoning has and is expected to make people loads of money, yet there is no obvious reason why land used for building should cost much, much, more than agricultural use. Builders around the outskits of Dublin are paying 50,000 to 150,000 for small volume sites depending on (fairly ordinary) location at, say, 1/10th of an acre. Why should this be necessary?

Obviously, if land prices were allowed to reduce significantly (Nama owns quite a bit) then there might be bank balance sheet implications. Is that a good enough reason? It certainly is an expedient one since nobody seems to mind.

Why concentrate on build costs when the profitability is so influenced by price at which the land was bought and selling product into an upswing in prices?

The volatility encourages either expectations of high returns, by international standards – or why bother.

when I now look at a median new single house in the US at 220 000 $ (realtor link) , divide this by 1.25 $ / Euro and 220 sqm (, Ill get to 800 Euro / sqm puts a median of 1400 Euro per sqm on German cities in 2009

and then it becomes clear that in many other European countries real estate is still or again overvalued, in comparison to other countries and to the past, like just 10 years ago,

fake wealth, which will melt away over the next 10 – 20 years

Driving real estate prices up by rationing, is good for those who already own, gets your market going again, for a moment,

but it is bad for new and eager people, who will find better pasture in my place

There is an enormous difference between stick built, asphalt roofed (75 yr) houses in the US and Germany with its multi chambered clay brick, tiled roof 400 yr houses. Also I have seen field stone gate piers and walls with wrought iron gate to adhere to local codes. In Germany adhering to local codes which are onerous (colour, shape, type of windows and doors is an expensive exercise. Even Ireland has better built houses than the US, our Poles and Portuguese were better than the ones in the US. Actually it is the building codes and making them stick that makes all the difference. Houses on raw land in North America go up within 90 days, in Germany I have seen single family houses take 3 years to build. German houses require skilled labour stone masons, plasterers, tilers as opposed to drywallers, vinyl/plastic layers.

If volatility is going to be a feature of irish house prices from now on, what changes are required for mortgage design? What sort of extra cost would non recourse impose on an average mortgage? The risk has to be met by punters and lenders not tax pixies.

@Seafoid/ UFC

The point that the volatility of house prices does change expectations radically is well made, but the Minister has promised that we are moving away from the boom-bust economy, that is course after he gets house prices to ‘rise another little bit’ and maybe ‘another little bit’ again.

We could probably get Paddy Power to come up with a bet that the lenders could avail of, to cover the expected volatility. The lenders could collect at Paddy Power, not at Kildare street.

Yes, ‘ideas’ are important: always were. But if you lobby politicians to create and maintain an ‘organization’ whose principle function is to have residential property green-sites on an ever-upward spiral – then your ‘expectations’ are what? Yeah, I thought so.

I suppose the shift from Production/Consumption to Financialization is hardly a significant factor? Just might. So, residential properties being an asset class in the FIRE economy will offer opportunities for injecting surplus liquidity? Sure will. If you then couple-up this with fiscally related revenue streams – that’s when you should notice the so-called volatility. Is this what they have re-named asset price bubbles? Volatility. Nice one.

This will not have a ‘happy-clappy’ ending. Folk have to have simultaneous (and appropriate) increases in their incomes to purchase a home on a long-term basis. But, the new ‘black’ is zero-hour and short term contracts, no or low basic (you get paid on a commission only basis), increases in regressive taxes (especially the disguised variety) – and the bubble-vision crooners and spokesmodels are adamant that residential property prices can only go ever-upward! Yeah!

Excuse me, but its a beautiful morning – again, and I am going to catch a few rays whilst this glorious September continues!

We’ll, sure as hell, be back at this one.

The housing shortage is largely a Dublin urban area problem. The first thing to do is relocate the Dublin Docks to Wicklow, Wexford or Cork. The vacated land to be rezoned high density residential with a sliver walled off for FIRE office buildings and designated the tax free, international trade zone. This will reduce truck traffic and pedestrian deaths in the centre of Dublin. The Boston big dig while politically popular is a 1950s’ solution that is ill suited to a world that will have to adapt to bicycles and tracked transit powered electrically within 25 years. The build up of cheap energy took over 200 years but much less in Ireland which had bicycle rush hours and booming turf production up until the end of the Korean war (1954). Look at all those black and white documentaries done by a British film company from the 1920s’ to 1950s’.

Greece is getting a Russian built nuclear power facility. it is about time Ireland got its act in gear.

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