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A question about house prices

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  • 30-06-2009 1:27pm
    #1
    alan4cult
    Registered Users Posts: 1,583 ✭✭✭


    Is it possible for the government to set a minimum price on a house in order to stimulate the housing market?

    I realise that many factors influence the price of a house (location, size, etc.) but could an artificial bottom to the price of houses not help to restimulate the property market?


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    #2
    solice
    Closed Accounts Posts: 1,110 ✭✭✭solice


    The market was over inflated, it needs correcting! I know its tough to bare for a lot of people but the market will correct itself accordingly. The govt dictating policy like that will only delay the inevitable.

    Plus, do we really want to become over reliant on the property market again?


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    #3
    gurramok
    Closed Accounts Posts: 13,992 ✭✭✭✭gurramok


    Oh boy, lets re-inflate the bubble that has destroyed us. Nice plan ;)


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    #4
    Wertz
    Closed Accounts Posts: 11,909 ✭✭✭✭Wertz


    How would setting a minimum price on housing stimulate the market?

    All that happens there is the price reaches a certain level and doesn't drop further...great if you're a home owner facing possible negative equity and other such nastiness....not so good if you're a buyer who is unable or unwilling to pay the imposed minimum price (and thusly not good for the seller/agent). As mentioned above, market forces are what got us into the mess and are what will (eventually) get us out of it...


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    #5
    astrofool
    Registered Users Posts: 16,699 ✭✭✭✭astrofool


    I think the idea would be that people would be more willing to buy when they know the price is as low as it will go, rather than keep waiting.

    Wouldn't work anyway, and would create a regulated market. House prices will correct themselves, and then start rising again at some stage, along with inflation, until we are out of recession, the prices will continue to drop.


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    #6
    Gurgle
    Closed Accounts Posts: 5,064 ✭✭✭Gurgle


    alan4cult wrote: »
    I realise that many factors influence the price of a house (location, size, etc.) but could an artificial bottom to the price of houses not help to restimulate the property market?
    In a roundabout way, thats what they've been doing for the last 10 years - and thats what got us into this mess.

    It hasn't been 'controlled' through a minimum price, but through over-regulation of planning permission for self-builds and one-offs they've driven most of us into the housing estate trap where prices are at the mercy of whatever a builder feels he can get away with.

    Personally, I think the whole thing would have settled down faster if the builders, bankers, investors and landlords were left to lie in the beds they'd made for themselves. It will never settle as long as the gubberment keeps taking money off the potential buyers and giving it straight to those responsible.


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    #7
    Wertz
    Closed Accounts Posts: 11,909 ✭✭✭✭Wertz


    astrofool wrote: »
    I think the idea would be that people would be more willing to buy when they know the price is as low as it will go, rather than keep waiting.

    That's a good point...but then you're left with the connundrum of where you set that baseline price, how you arrive at it, factoring in regional variations etc.
    Buyers are obviously waiting for value in the market and no-one wants to pay X for property now if it's going to be worth a lower value in a years time (although they were queing up when it was the other way round)...there's also the point that stricter mortgage criteria and credit availability in general is adding to the continual fall in prices; setting a "lowest possible value" price will not negate the lack of the actual funds with which to buy at that price...


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    #8
    alan4cult
    Registered Users Posts: 1,583 ✭✭✭alan4cult


    A minimum price would bring a level of confidence to the market. I totally agree that markets are the only way to properly set prices but I do believe markets can be accelerated by confidence.


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    #9
    alan4cult
    Registered Users Posts: 1,583 ✭✭✭alan4cult


    gurramok wrote: »
    Oh boy, lets re-inflate the bubble that has destroyed us. Nice plan ;)
    To be honest I do think we are on the other end of the stick with regards to a price bubble. We're working with different economic circumstances now.


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    #10
    Wertz
    Closed Accounts Posts: 11,909 ✭✭✭✭Wertz


    There has to be better ways of injecting confidence....the country/economy is reeling from punches from all sides...people's confidence in the security of their job or future career prospects could be as much to blame for steadily falling prices and lack of sales, as the fear of paying over the odds for a home.


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    #11
    Senna
    Registered Users Posts: 8,800 ✭✭✭Senna


    They did make a pathetic attempt to set a base price with their HOME CHOICE LOANS plan, thank god not one person in the whole of Ireland was stupid enough to fall for it.


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    #12
    zootroid
    Registered Users Posts: 784 ✭✭✭zootroid


    Wertz wrote: »
    How would setting a minimum price on housing stimulate the market?

    All that happens there is the price reaches a certain level and doesn't drop further...great if you're a home owner facing possible negative equity and other such nastiness....not so good if you're a buyer who is unable or unwilling to pay the imposed minimum price (and thusly not good for the seller/agent). As mentioned above, market forces are what got us into the mess and are what will (eventually) get us out of it...

    Market forces that were driven by poor government policy.

    I don't think a minimum price needs to be introduced, it would not be in the interest of the consumer. And I also think that people will not necessarily hold off in the hope that prices continue to fall, people will buy when they see value. And people aren't buying at the moment as there is a recession going on and are worried about their current and future employment prospects.


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    #13
    Small Change
    Closed Accounts Posts: 83 ✭✭Small Change


    alan4cult wrote: »
    Is it possible for the government to set a minimum price on a house in order to stimulate the housing market?

    I realise that many factors influence the price of a house (location, size, etc.) but could an artificial bottom to the price of houses not help to restimulate the property market?

    A far better idea would be to set a maximum price on a house, say €100,000.
    This would also stimulate the property market and would have the added benefit of reducing the % of earnings that effectively disappears into the black hole of mortgage repayments and instead divert it into the value-added sectors of the economy.

    I'm not advocating this, by the way, but if the govt really felt the need to regulate prices this would be a much better way to go about it.


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    #14
    astrofool
    Registered Users Posts: 16,699 ✭✭✭✭astrofool


    Small Change wrote: »
    A far better idea would be to set a maximum price on a house, say €100,000.
    This would also stimulate the property market and would have the added benefit of reducing the % of earnings that effectively disappears into the black hole of mortgage repayments and instead divert it into the value-added sectors of the economy.

    I'm not advocating this, by the way, but if the govt really felt the need to regulate prices this would be a much better way to go about it.

    This would probably be the stupidest thing ever to do ever, in the history of a state which has done a lot of very very stupid things.

    People simply wouldn't sell their houses any more, they wouldn't be able to move country, labour mobility would be destroyed. We'd have hawks buying Irish property due to the high returns via rent, and a vast majority in the country would owe more than the property is worth, bank balance sheets would be blown away.

    It would be far simpler to turn to anarchy.


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