Yet again, the Norn Iron news is up in arms about property prices. First off, a little glimpse of the happy news. For me, anyway.

Property prices are now rising at a rate of more than £100 a day in Northern Ireland.

Happy happy joy joy.

But on a less selfish note: This is pricing a hell of a lot of people out of the market. Which is never a good thing. But there is a simple financial reason: supply and demand. More people want houses than can buy them, so the price will rise. So build more and the rate of rise will slow; don’t (for example) make it more difficult for people to build.

Other things you shouldn’t do, yet are being talked about in the article:

  • taking land away from property speculators who have failed to build housing on it – because that would be theft, m’kay, and that is bad.
  • vesting empty properties – see above.

Of course, I’m not all negative. Some of the ideas aren’t bad: removing stamp duty (and not just for politicians) would be good, as would upping the help for co-ownership schemes, and helping housing associations.

It’s just that the two negatives would outweigh the goods. And they’re not talking about removing some of the planning burden, so they’re not thinking about things seriously.

5 thoughts on “GAH

  1. Remove stamp duty and the saving will be added straight onto the price of housing. Never doubt the market’s efficiency at reallocating funds. Supply and demand like you mentioned :-)

    I’m all for less taxes / smaller government so I don’t mind the abolition but I don’t for a minute think it will ease getting onto the housing ladder or “help” anyone.

  2. It would help people in the first couple of weeks, until the prices realigned themselves.

    And, as you say, it would be less tax, which would help everyone in the long run. A good thing, but not necessarily related to house prices.

  3. I have always wondered how it is a good thing when property prices are increasing. If you move house you may get a huge wodge of cash but inevitably it is going to have to go towards purchasing the new house. Not being a lets move every 8 months type myself so maybe I am not getting the benefit that I keep hearing about. Who really buys smaller apart from old people who want a bungalow so they don’t have to walk upstairs. Wages do not increase in proportion either. Don’t tell me it’s good for the economy as would it not be better for the economy if I had more spare cash to buy more stuff rather than hand it over to the mortgage lender. Maybe I am being somewhat naive in saying this.

  4. House prices increases in and of themselves aren’t the issue. House price increases higher than wage increases are the issue. The average salary multiple needed to buy the average house used to be 3? Now its closer to 5.

    Thank you government planning departments and green belts. I’m not entirely convinced this multiple will remain, the stock market is starting to give excellent returns again so I fully expect private equity to go into stocks instead of real estate in the next 5 years.

    Mix in rising interest rates with most people already on the knife edge of being able to pay their monthly mortgages and we could see a spate of re-possessions…. increasing supply…. lowering prices. Will it crash? Who knows. I certainly don’t.

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