what kind of measures can the Gov introduce for FTB
- Thread starter MfS
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Brownie10
Guest
The best thing they can do is nothing! Let the prices continue to fall. The market will find the right level. The average industrial wage is €38k, the average house price should be no more than 5 times this, €190k, currently it is about €250k so there should still be 24% to go.
Any measures they introduce will only help bail out the exposed property developers, not the FTB.
I am a FTB and would prefer they let prices fall rather than give me a grant/AH scheme which will just end up in a developers pocket.
Any measures they introduce will only help bail out the exposed property developers, not the FTB.
I am a FTB and would prefer they let prices fall rather than give me a grant/AH scheme which will just end up in a developers pocket.
Well the govt have to look at their coffers and weigh up whether its better to stimulate the market or let things find their own way. People get very built up about the perceived notion that a stimulus to the market is just to 'bail out their property developer buddies' which is a very narrow minded attitude and a bit of mob mentality takes over.
The govt will see obviously that their income is way down this year and one way to increase this income would be to get the market going in some way. For instance when new houses are not selling they are getting no vat payment from builders but in the meantime the builders will have actually claimed back vat on the supplies etc used in the buildeing of the property so in effect the govt is down further because the houses are not selling. They could provide an incentive to get new houses moving such as grant or tax back. The other aspect that seems to be getting some backing is the ah scheme but I don't think this would be of any use or get any backing.
I absolutely disagree.
The best thing for most players in the property market (I include EAs, brokers, government coffers etc.) is to let the market correct (ie. let prices fall) as quickly and efficiently as possible.
Activity simply will not return properly until prices return to affordable level.
When prices return to a reasonable level, and the market becomes active again, - the govt can make money from VAT and stamp, EAs can make commisions (albeit not from overpriced sales, but at least from activity), brokers and banks can do business. Of course they'd love inflated prices, - but economics tells us over and over again that the market is brutally efficient. It will correct one way or another.
Delaying the bottoming out delays bringing real activity back to the market, which delays a sustainable livelihood for most players.
The best thing for most players in the property market (I include EAs, brokers, government coffers etc.) is to let the market correct (ie. let prices fall) as quickly and efficiently as possible.
Activity simply will not return properly until prices return to affordable level.
When prices return to a reasonable level, and the market becomes active again, - the govt can make money from VAT and stamp, EAs can make commisions (albeit not from overpriced sales, but at least from activity), brokers and banks can do business. Of course they'd love inflated prices, - but economics tells us over and over again that the market is brutally efficient. It will correct one way or another.
Delaying the bottoming out delays bringing real activity back to the market, which delays a sustainable livelihood for most players.
HouseOfCards
Registered User
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Bang on.
Forget the patronising 'perceived notion that a stimulus.... is just to 'bail out their property developer buddies' which is a very narrow minded attitude and a bit of mob mentality'.
Despite people having good reason to consider this to be the case.. affordability is what its all about. Property is over priced and values need to correct. When they come into peoples financial reach, then that'll be stimulus enough
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starlite68
Registered User
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- 330
well said...house of cards!
M
Mo Sizlak
Guest
MrMan, would you care to expand on this? In what sense is the doing the right thing for the economy "narrow minded"? And do you really believe that the developers do not own a massive chunk of Fianna Fail?
Further, do you not agree that there are plenty of vested interests in Ireland who have been talking up the market and telling us prices would rise (fooling a lot of people into disastrous buying decisions) but no lobby group agruing for the good of the country?
As other posters have commented, this crash is exactly what the country needs. The pity is that it did not happen a couple of years ago when it would have been much less severe, and fewer people would have been hurt.
Did i hit a nerve? how was it patronising? My point was not that the bailout would be a good or a bad thing just that it may be something the current govt see as a way of providing much needed funds now.
When you say do the right thing am I to presume that you have looked at all of the options available and your way is the right way end of story? When I say narrow minded I say that at the attitude of 'this is happening because FF are the builders friend' its narrow because it fails to examine the other possible reasons for govt intervention.
Regarding a massive chunk of FF being owned by developers I would say that if that is the case, developers must be very popular as the people have constantly returned to them to lead the country.
Regards VI's of course people talk things up if it means that the outcome will suit them just as I'm sure that you will agree people will talk things down to suit their own needs too. Look at jetro on another thread doing what he can to make sure that prices fall because he has yet to 'step on the ladder' and I think he would be mad not to take this line as it is obviously in his interests. We all take care of ourselves to some degree I just object to those who take the moral high ground and can't see the they are as much a VI as the next guy.
Absolutely nothing! FTB never had it better.......it is those trading up is ONE of the reasons for the stalemate in the second hand property market at the mintue!! It is ONE of the reasons why auctioneers are having difficulty in moving a lot of properties. Stamp Duty is a major problem for the second time buyer!! I don't think the budget will have any effect. It will take some time to level out. Saying that, property STILL needs to come back to realistic prices.
O
oceanclub
Guest
The Property Pin had a successful demo outside Dail Eireann yesterday:
http://www.thepropertypin.com/viewtopic.php?f=4&t=13560
http://www.thepropertypin.com/viewtopic.php?f=4&t=13739
http://www.youtube.com/whereisthedail
http://www.independent.ie/business/...udget-boost-for-firsttime-buyers-1482603.html
The best thing you could do is join the next one.
P.
http://www.thepropertypin.com/viewtopic.php?f=4&t=13560
http://www.thepropertypin.com/viewtopic.php?f=4&t=13739
http://www.youtube.com/whereisthedail
http://www.independent.ie/business/...udget-boost-for-firsttime-buyers-1482603.html
The best thing you could do is join the next one.
P.
Big difference between a VI whose occupation is either to sell houses or mortgages for a living and a VI who is trying to buy a home to live in for the first time without having a lifetime of debt around his/her neck.
HouseOfCards
Registered User
- Messages
- 15
Nope. Saying that people who believe the fact that the gov intends to bail out the developers are 'narrow minded' and have a 'mob mentality' is just plain old patronising.
And anyway, nobody above said anything about the gov and property developers being buddies until MrMan did - "And that ends todays lesson on how to hit a nerve without even trying"!!!!!
Someone has already made a mess of making 'much needed funds available', it resulted in property being x 6.5 the average income, inflated, outside the reach of most FTB's, negative equity galore, people losing their homes and/or their savings invested in property, unavailability of credit etc etc etc…… oh..... and the brown stuff we're now in aka a crash of some description
Whoever they voted for, with the slowdown in sales, the electorate is demonstrating that they're not willing to continue paying for overpriced property. Paying for it by delivering a bailout consisting of tax we paid to the gov., is just paying without a say.
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While it's very easy to be populist and say that any bailout will only suit "FF's developer friends", the reality of the situation is that the current stalemate is not good for the irish economy.
All those first time buyers salivating about dropping prices should also realise that they won't be getting much of a mortgage if they have no job, which becomes increasingly likely as you have a stalemate which is reducing both employment and tax take like you have now.
Sure, house prices would be great if they dropped another 20% for the FTB, but at what cost. 10%+ unemployment could be the price that has to be paid.
It is wrong that so much of the economy got centred around the building boom, but like it or lump it, it was up to 25% of our economy and as that contracts, you will see serious cutbacks and spill over effects into areas of the economy you didn’t realize would be impacted.
One of the main issues that should be resolved, is the hit people take on stamp duty, should they wish to move home. They may or may not be carrying negative equity in a situation like that, but in effect taxing people to move on top of that is not smart for an economy.
Barriers for the free movement of labour should be removed, and stamp duty should not be levied with every move.
At the end of the day, property taxes are going to be introduced, in order to provide stable income to the exchequer, which does not fluctuate highly with each boom/bust cycle. (This should be introduced, but with graduated exemptions for people who have paid stamp duty in the past, so as to be fair to all). They need not be high, but they would provide a stable income stream for the gov. The civil service and handout system needs a complete overhall. Rent allowance which inflates rent is pointless in the long hall, as are about a thousand other handout schemes that are currently running. While many are valid, their current implementation is wasteful, and efficiency gains in the civil service should be linked to any further wage agreements.
In the last few years, stamp duty and VAT receipts from the boom gave the government a bonanza of cash that couldn't be described as a stable income stream, and they signed wage agreements based on this temporary boom, which we are seeing in hindsight were ill-conceived and overly generous.
Of course there are lessons to be learnt for the future, but no matter what your take on the current situation is, the realization that the current situation is not good for the country should be pretty easy to see.
What steps are taken to right the ship, we will see in time, but steps need to be taken, and lessons need to be learnt.
There is a lot more at stake here, than house prices for FTB's.
All those first time buyers salivating about dropping prices should also realise that they won't be getting much of a mortgage if they have no job, which becomes increasingly likely as you have a stalemate which is reducing both employment and tax take like you have now.
Sure, house prices would be great if they dropped another 20% for the FTB, but at what cost. 10%+ unemployment could be the price that has to be paid.
It is wrong that so much of the economy got centred around the building boom, but like it or lump it, it was up to 25% of our economy and as that contracts, you will see serious cutbacks and spill over effects into areas of the economy you didn’t realize would be impacted.
One of the main issues that should be resolved, is the hit people take on stamp duty, should they wish to move home. They may or may not be carrying negative equity in a situation like that, but in effect taxing people to move on top of that is not smart for an economy.
Barriers for the free movement of labour should be removed, and stamp duty should not be levied with every move.
At the end of the day, property taxes are going to be introduced, in order to provide stable income to the exchequer, which does not fluctuate highly with each boom/bust cycle. (This should be introduced, but with graduated exemptions for people who have paid stamp duty in the past, so as to be fair to all). They need not be high, but they would provide a stable income stream for the gov. The civil service and handout system needs a complete overhall. Rent allowance which inflates rent is pointless in the long hall, as are about a thousand other handout schemes that are currently running. While many are valid, their current implementation is wasteful, and efficiency gains in the civil service should be linked to any further wage agreements.
In the last few years, stamp duty and VAT receipts from the boom gave the government a bonanza of cash that couldn't be described as a stable income stream, and they signed wage agreements based on this temporary boom, which we are seeing in hindsight were ill-conceived and overly generous.
Of course there are lessons to be learnt for the future, but no matter what your take on the current situation is, the realization that the current situation is not good for the country should be pretty easy to see.
What steps are taken to right the ship, we will see in time, but steps need to be taken, and lessons need to be learnt.
There is a lot more at stake here, than house prices for FTB's.
O
oceanclub
Guest
Just to be clear - are you suggesting that we maintain construction employment at its previously artificially-inflated levels by continuing to build houses that aren't need?
P.
Of course not.
What I am suggesting is that a responsible government should try to use measures to reduce shocks to an economy.
Think of it like being in a car crash. Would you rather hit a tree at 60mph, or 30mph?
Responsible measures need not be for the benefit of any one group, but a confidence improving measure that allows us to move from here, to economy not so dependent on construction, which is where we should have been in the first place.
Having an economy where people are able to get financing for houses, and having confidence to buy those houses if they choose to do so, would be a good first step. Artificially inflating prices should not play any part in this.
Buyers have learnt a valuable lesson in the past two years and are in a much better position to make informed decisions now, than they were in the past.
Prices will be determined by yield at the end of the day, and government maneuvers should not impede this.
What I am suggesting is that a responsible government should try to use measures to reduce shocks to an economy.
Think of it like being in a car crash. Would you rather hit a tree at 60mph, or 30mph?
Responsible measures need not be for the benefit of any one group, but a confidence improving measure that allows us to move from here, to economy not so dependent on construction, which is where we should have been in the first place.
Having an economy where people are able to get financing for houses, and having confidence to buy those houses if they choose to do so, would be a good first step. Artificially inflating prices should not play any part in this.
Buyers have learnt a valuable lesson in the past two years and are in a much better position to make informed decisions now, than they were in the past.
Prices will be determined by yield at the end of the day, and government maneuvers should not impede this.
Providing taxpayer finance to FTBs up to 300K is artificially propping up prices on my book. While banks are not throwing money around it is still possible to get finance where a buyer has a reasonable deposit saved up. Now, the government are providing finance to buyers that the major financial institutions deem it too risky, - this is akin to subprime lending (while these people certainly may not have bad credit historys, they are too risky to give such large sums to in a falling market.
I wish this were the case, - unfortunately there are plenty of people who will take as much money as is thrown at them. Most government intervention at this stage is futile, it will hardly cushion the blow at all, it only amounts to money wasted.
Government maneuvers will not stop the inevitable correction of the market, but they will waste a lot of my hard earned money.
How about this: the government encourages stable, sustainable, home-grown industry that adds value and creates an internationally-tradeable product or service.
Industry that operates in a cost-competitive environment - not one where staff are constantly seeking pay rises to pay off their jumbo mortgages.
Has this country reached the point that all we're fit to do is don hard hats and throw up shoebox apartments in Edgeworthstown?
I am sick of listening to economic debates on the radio consisting of a FF representative, a FG representative, a trade unionist and a CIF spokesman.
For god's sake. The last 2 years have been a much needed wake-up call that you cannot run an economy by selling shoebox apartments in Edgeworthstown to each other.
Yet some of us still cannot see the light, the fact that our competitiveness has been ruined by the property bubble, that prices MUST crash, pain MUST be felt and new ideas for wealth creation other than construction MUST be born if we are ever to get out of this.
The market will reach equilibrium, and the pain will be meted out. It's our choice whether we want to get it over with quickly or draw it out for a decade.