Wednesday, December 21, 2011

What housing crisis?

House prices are continuing to fall in Ireland. And apparently the rate they are falling at is increasing. Why should this be a surprise? People are out of work; the government is taxing everything in sight; the prospects for the economy are bleak; the banks are tight when it comes to lending; and there's a huge over-supply of housing left over from the building-boom.

What people should really be wondering about is why they aren't falling faster ... but of course, the reason is that the Irish people are pouring borrowed money into the banks so that they don't have to force developers to flood the market with houses. That can't go on forever, so eventually it seems logical that prices must drop further.

The truth is, the way things stand there is no reason why property shouldn't go back to pre-boom levels. Basic supply and demand. Lots of houses plus not much money in the economy equals low prices. But then, since the 'experts' couldn't figure out that an endless spiral of price increases fueled by banks willingness to lend ever increasing amounts was bound to end badly, maybe these same experts can't see the writing on the wall in relation to the current situation now either.

And the real irony is that we have people homeless in a country where the government is the effective owner of hundreds of thousands of empty housing units. Maybe irony is the wrong word. Perhaps vanity is closer. Or avarice. Or pride. One thing is sure - whatever is the right word, I'm pretty sure it must be one that describes a sin, and a serious one at that.

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