Are houses really unaffordable?

[Purple]

How would that provide any more houses though if international investors are the real culprits?

That's a different issue to the price problem.
If 2 people want to buy one apple and the guy with the most money has €10 then the apple will cost €10.
If 200 people want to buy one apple and the guy with the most money has €10 then the apple will cost €10.
If all of a sudden someone turns up with €25 of brand new printed money then the apple will cost €25. It matters not if there are 2 or 200 other perspective buyers.

Back to houses.
All that printed money is also inflating the price of the materials used to build houses, the land the houses are built on and just about everything else in the supply chain. As long as the net return on the investment is above the interest rate a leverages investment is being charged or the returns from Bonds etc then it will stay in property. Remember that pension funds have to keep money in safe asset classes and that's what Irish property is seen as.

 

[Salvadore]

If anything, it highlights the fallacy of increasing residential property taxes.

As alluded to, a lot of people are house asset rich but without a substantial regular income that would allow them pay a property tax relative to their houses’ value.

There’s no point in disincentivising people to stay in their current properties if they have limited option to downsize. It’s not like they have anywhere to go.

You could argue perhaps that a high enough property tax on second homes and investment properties would increase supply for domestic prospective buyers but this would doubtless decrease the availability of rental properties and cause a bunch of other problems.

There’s no easy solution.

 

[Purple]

If anything, it highlights the fallacy of increasing residential property taxes.

The main function of property taxes is to control the price of property. Higher taxes at specific bands can act anchors on the market. It also reduces the net returns for institutional investors and makes sitting on empty property more expensive.

As alluded to, a lot of people are house asset rich but without a substantial regular income that would allow them pay a property tax relative to their houses’ value.

If you can pay a €1000 a month mortgage then they can pay €200 a month in property tax after its over.
If someone is retired and on a low fixed income then the tax can be rolled up and taken from their estate when they die.

There’s no point in disincentivising people to stay in their current properties if they have limited option to downsize. It’s not like they have anywhere to go.

True, but that's not the main aim.

You could argue perhaps that a high enough property tax on second homes and investment properties would increase supply for domestic prospective buyers but this would doubtless decrease the availability of rental properties and cause a bunch of other problems.

The State buying homes out from under first time buyers is the bigger problem at the moment.

There’s no easy solution.

That's very true.

My main point in this thread is that it's nonsense to blame the banks or the government for our current housing problems.

The government could probably do more but that would involve restructuring the planning system and making the State sector efficient and well run. If they figured that out then we'd be the best country in the world.

 

[Leper]

If I was starting my working life again, I think I’d be looking abroad.

We've looked at various solutions and we are not blaming the banks, the government or anybody else for that matter. But, some of us think that getting elderly people out of their homes Ireland's housing problem would be resolved. I'd love to be talking with some official calling to me regarding repossessing my home for some newly wed. Our home is worth four times (or more) my retirement nest-egg and I bet this is the national average at least.

The only positive suggestion came from @Salvadore i.e. go and work abroad, accumulate enough money before you return to Ireland and then pay cash for your new home. Government and Banks obviated and hey, the only people left in Ireland Ltd permanently are the elderly.

We as a nation need to do some more thinking guys and I love the bit where offspring is gifted with cash from parents and paying tax on the gift. I'm sure our Revenue Commissioners are working overtime collecting this tax.

I reckon next stop for Eileen and Paddy is Dubai.

 

[odyssey06]

The main function of property taxes is to control the price of property. Higher taxes at specific bands can act anchors on the market. It also reduces the net returns for institutional investors and makes sitting on empty property more expensive.

If you can pay a €1000 a month mortgage then they can pay €200 a month in property tax after its over.
If someone is retired and on a low fixed income then the tax can be rolled up and taken from their estate when they die.


True, but that's not the main aim.

The State buying homes out from under first time buyers is the bigger problem at the moment.

That's very true.

My main point in this thread is that it's nonsense to blame the banks or the government for our current housing problems.

The government could probably do more but that would involve restructuring the planning system and making the State sector efficient and well run. If they figured that out then we'd be the best country in the world.

Is there a correlation between the rate of property tax and property price increases in other countries i.e. that shows them being moderated by it?

I haven't come across anything to indicate that "the main function of property taxes is to control the price of property".

As far as I'm aware, the main function of property taxes is to fund the authority that levies the tax.

 

[Purple]

Is there a correlation between the rate of property tax and property price increases in other countries i.e. that shows them being moderated by it?

There's loads of literature on it, particularly in the US where wealth taxes are high and income taxes are low.
Property taxes in the US are very high, much higher than I'd like to see them here.

I haven't come across anything to indicate that "the main function of property taxes is to control the price of property".

That's my assertion in the context of this discussion.

As far as I'm aware, the main function of property taxes is to fund the authority that levies the tax.

The main function of many taxes is social engineering; plastic bag tax, tobacco tax, alcohol tax, motor tax based on emissions etc.

I'm in favour of a society where equality of opportunity is a priority. For that to happen we need to tax earned income less and tax unearned income and retained wealth more.

 

[losttheplot]

There's loads of literature on it, particularly in the US where wealth taxes are high and income taxes are low.
Property taxes in the US are very high, much higher than I'd like to see them here.

That's my assertion in the context of this discussion.

The main function of many taxes is social engineering; plastic bag tax, tobacco tax, alcohol tax, motor tax based on emissions etc.

I'm in favour of a society where equality of opportunity is a priority. For that to happen we need to tax earned income less and tax unearned income and retained wealth more.

Would removing the CGT exemption on PPR help. If I paid 150k before all the money printing, I want to sell for as much as possible and the gains are tax free. If I wasn't able to make much of a gain due to tax, selling for more would be no advantage to me. Adjustments could be made for inflation and significant improvements.

 

[Brendan Burgess]

Folks

While the original post from Cremeegg raised an interesting topic and was well within the Posting Guidelines, it degenerated into off-topic , repetitive stuff, and speculation on house prices which we don't allow.

So I have deleted the off topic and repetitive posts and the price speculation.

Brendan