Plans for reinvigorating the Housing Market

LostCorkGuy

Hi emm this is for an economics essay and admittedly I could use your help

Do you have any idea on what policies which the government could introduce to help housing prices increase once again. And are such policies sensible?
Please explain your reasoning !

Ah thanks a million for any replies

tenchi-fan

Allow people to use their pension funds to pay chunks off their mortgages (particularly negative equity), or to pay a deposit on their first homes. The latter is already permitted in Canada.

Bluetonic

LostCorkGuy wrote: »

Do you have any idea on what policies which the government could introduce to help housing prices increase once again.

Why in Gods name should they help housing prices to increase? :mad:

Finnbar01

The best thing to happen the housing market is for the government to get out of the way (NAMA) and allow the prices to find their natural floor, ie, the price people are willing to pay for the property.

LostCorkGuy

LostCorkGuy wrote: »

Do you have any idea on what policies which the government could introduce to help housing prices increase once again. And are such policies sensible?

They already have many policies to try and help house prices

https://www.youtube.com/watch?v=pWlz1IKWfw4

investor demand is driven by rental yield and the state provides funding for 50% of the rental market:

95,000 households are supported by rent supplement, which the Department of Social Protection says is about half of the total private rented market in Ireland.

In 2009 the Department paid over €500m in rent supplement.

http://www.rte.ie/news/2010/0610/rent.html

some threads here might help

http://www.thepropertypin.com/viewtopic.php?f=4&t=13848

to answer your last part of the question in short - no its a very bad idea to artificially inflate house prices. Workers & businesses spend more than is necessary on accommodation costs which would otherwise go toward economic expansion.


a simple supply & demand curve will illustrate exactly the problem with this type of government intervention!
amazing that for 10 years so many turned a blind eye to such a fundamental thing in economics & continue to do so

Effect on the market

A price floor set above the market equilibrium price has several side-effects. Consumers find they must now pay a higher price for the same product. As a result, they reduce their purchases or drop out of the market entirely. Meanwhile, suppliers find they are guaranteed a new, higher price than they were charging before. As a result, they increase production.

Taken together, these effects mean there is now an excess supply (known as a surplus) of the product in the market. To maintain the price floor over the long term, the government may need to take action to remove this surplus.

Atlantic Dawn

They could create a new bank giving 100% mortgages to people who have no deposit saved and no previous history of saving.....now why does that sound familiar

dsmythy

I'd like to maybe be able to buy a house in a couple years please. Down not up!

washman3

LostCorkGuy wrote: »

Do you have any idea on what policies which the government could introduce to help housing prices increase once again. And are such policies sensible?
Please explain your reasoning !

Ah thanks a million for any replies

You are either a developer/auctioneer/politican or taking the piss.
The whole cause of this sorry mess is government interference in the housing market. And they have already introduced another policy called NAMA to prevent house prices reaching the bottom.
This was done to help nobody but their cronies and contributors to the Galway Tent.
As another poster said, let the government get out of the way,abandon NAMA and let a natural floor to develop.

Wildebrian

1.Make funds available to the banks on the express understanding that it be used for mortgage lending and not to shore up the Banks future losses.
2 Re-introduce the first time buyers grant.This will easily be recouped from Tax generated from the development costs/site purchase.

SBWife

First time buyers grant was nothing but a subsidy to builders and developers. Anytime it was increased the average price of an eligible new home increased by an equivalent amount. A grant designed to improve affordability should apply equally to a new and a second-hand home. Any policy to reinvigorate the market should treat new and second-hand homes in the same manner.

LostCorkGuy

Thanks a million for those !
I'm not having a laugh , its my lecturer who failed my continuous assessment during the year who is

I think he ment in the question what could the government do and why would it be totally illogical of them to do so !

SBWife

LostCorkGuy wrote: »

Thanks a million for those !
I'm not having a laugh , its my lecturer who failed my continuous assessment during the year who is

I think he ment in the question what could the government do and why would it be totally illogical of them to do so !

You could easily make the argument that they've already done the completely illogical bit by taking the associated loans from the banks into NAMA at the discounts that they have (you'll find plenty of facts and figures in the NAMA reports to date), and that anything else they do is designed to mitigate this mistake. So that Government policy as regards property (housing is about 14% of NAMA loans IIRC) is now designed to take the losses to NAMA over a longer time horizon and preserve the existing equity in NAMA.

PhatPiggins

A bulldozer and directions to the 300,000 or so empty units that will never sell.

Seriously though OP do some research on creative destruction being needed to reset the markets. It'll give you something resonably original to submit.

Geuze

LostCorkGuy wrote: »

Do you have any idea on what policies which the government could introduce to help housing prices increase once again. And are such policies sensible?

High and rising house prices are bad for an economy. The last 10 years are a good example of the dangers of rapid house price inflation.

Germany has had (more or less) flat house prices for 20 years, and that hasn't caused any harm.

Wildebrian

The Poster is looking for suggestions on how to jump start the property market for an ECONOMICS PROJECT !!!! and not a series of diatribes from the disgruntled.Whilst all your posts are valid it is not what the Poster asked for.

SBWife

Wildebrian wrote: »

The Poster is looking for suggestions on how to jump start the property market for an ECONOMICS PROJECT !!!! and not a series of diatribes from the disgruntled.Whilst all your posts are valid it is not what the Poster asked for.

Wonder why he failed the continuous assessment phase?

Maybe because Boards isn't exactly a legitimate source to be using for academic research.

Tora Bora

It's probably, nigh on impossible to jump start the property market, given the state of the peoples mindset in general.
To jump start the market, people need to have some sort of stable view of their mid to long term employment prospects, and what level of taxation and other charges they are likely to face in future.
The government needs to set out a 5 year taxation and other government charge structure, so we call all see where we are going.

If that were done clearly and honestly (showing the hard facts, that personal taxes and charges are going to go up big time), you would quickly find the property market completely going in the toilet immediately, and then recovering a little over a long period.

In the absence of a clear picture of the future as outlined above, the market will just stagnate and fall somewhat more slowley than it would in the above scenario.

nesf

OP this forum is the last place I'd look for arguments for an academic essay.

washman3

Wildebrian wrote: »

The Poster is looking for suggestions on how to jump start the property market for an ECONOMICS PROJECT !!!! and not a series of diatribes from the disgruntled.Whilst all your posts are valid it is not what the Poster asked for.

The OP has actually got some valid suggestions regarding his project, read the posts.!!
And feel free to call us disgruntled, just like Bertie did to the likes of McWilliams and Morgan Kelly in 2007, and anybody else who spoke the truth.

Sleepy

Try this tactic: point out the insane strategies the government could try to re-inflate the property market and summarise by pointing out how bad an idea this would be. Guaranteed A.

nesf

Sleepy wrote: »

Try this tactic: point out the insane strategies the government could try to re-inflate the property market and summarise by pointing out how bad an idea this would be. Guaranteed A.

If and only if what he puts together is logically argued. If he merely states that it is a bad idea and it's a course worth doing then he won't get a 1H.

View

nesf wrote: »

If and only if what he puts together is logically argued. If he merely states that it is a bad idea and it's a course worth doing then he won't get a 1H.

No, but he'll probably be guaranteed a Ministerial position should he run for election.