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Monday, March 26, 2007

Cowen's knowledge of the housing market

I think it was informative to listen to Brian Cowen on Saturday suggesting that Fine Gael's stamp duty proposals would be some sort of Godzilla to the Irish housing market. It might have occurred to Cowen to tell this to his colleague McDowell who was the one to put the skids under the market last autumn. Cowen devoted quite a while to explain why people won't buy houses because 3 years from now! because the stamp duty would be less.

It might have slipped by Cowen's notice but people have to live somewhere in the interim period if they were to hold off buying their house and that money they pay out in rent isn't going into the equity of their house unlike what their mortgage payments would be. Telling people in advance what the government are going to do aids stability in the market, uncertainty as to what the government is going to do is what causes destabilisation.

The real people Cowen was concerned about and who might decide to hold off on buying houses was not owner occupiers but investors. FF concern about housing is more at needs of the suppliers who provide so much funding for the party and not the average Seamus and Joan looking for a home.

Of course, Cowen told us that the proposals smacked of people who had no knowledge of how the housing market worked. Well, Cowen's primary knowledge of the housing market is based on his experience as a solicitor and that would have been doing conveyancing, a field that was insisting on charging a set % fee of the purchase similar to estate agents (and how the stamp duty system operates today) despite there being no extra work involved in a €150,000 house than in a €300,000 one. Nice work if you can get it.

1 comment:

Kevin said...

Dan,

I have been watching for some time the Irish housing market and I agree with you wholeheartedly that the politicians are going to protect the speculators over the owner-occupiers. When the bubble burst here in Florida it was discovered that almost all of the run-up in price was caused by speculators and many of them have taken the brunt of the pain. No one can afford for it to happen in Ireland where you all have a bubble three times bigger than the US one. I would just sit back and wait for it to burst and pick up a good house at a cheap price.

Kevin
Orlando, FL