Friday 23 August 2019

Another credit free for all won't solve the housing crisis it would deepen it

Editorial Comment

iF THE definition of insanity is doing the same thing again and again and expecting a different result then Ireland clearly needs its head examined.

As housing crisis continues to deepen there are growing calls for the Central Bank to loosen the strict lending restrictions that were introduced after the crash to prevent another apocalyptic economic meltdown.

It is as though we have learned absolutely nothing from the devastating collapse of the property bubble and the years of crucifying austerity that followed it.

Make no mistake there is a housing crisis in Ireland but starting another credit free for all is most definitely not the way to deal with it.

If you need evidence of this you need look no further than Fine Gael's short sighted and grossly ill advised Help to Buy scheme for first time buyers.

When it was announced scores of economic experts warned that the scheme - which offers first time buyers a tax rebate of €20,000 - wouldn't stimulate building and would simply drive up prices and artificially inflate the cost homes.

The experts' worst fears proved to be well founded as this week we learned that since the scheme was introduced the average price of a house in Ireland jumped by €24,000.

Now the Government's costly mistake looks set to be compounded.

Realising its error the Government appears set to shut down the scheme. This has led to a surge in first time buyers rushing to take advantage of the rebate before it is closed off.

This in turn has led to further price inflation meaning that many buyers - including many who are still eligible for the Help To Buy scheme - still can't afford a home.

The root of the current crisis lies in another Government policy.

In its desperate attempts to deal with the associated homeless crisis the Government - rather than building houses - has resorted to snapping up private properties across the country.

This policy has led to a situation where few houses are available - to buy or rent - to those who aren't entitled to social housing and who are trying to buy a home.

Ironically the Government's efforts to house the homeless are actually forcing more people onto the social housing lists of local authorities all over the country.

Instead robbing Peter to pay Paul the Government needs to face facts and take action.

To deal with the housing crisis we need more houses, it's as simple as that. Loosening lending regulations will only drive prices up as more buyers, with more money, compete for the same small number of houses.

If this crisis is to be resolved the Government needs to take concrete but realistic steps to incentivize the construction sector.

At the same time the state also has to start spending money and building houses to meet our surging social housing needs.

Repackaging failed, boom-era housing policies is not only a fool's errand it is a recipe for disaster.

Wexford People