Monday, October 15, 2012

Won't somebody please think of the first-time buyers


From the Indo today.

In an interview with the Irish Independent, junior finance minister Brian Hayes said the deal would not be extended in December's Budget, and buyers must act before the "train will have left the station".

"This is an offer of a lifetime, it won't come again," said Mr Hayes. "All our futures are based on getting the property market going again. People need to act fast to avail of it."

"Jesus, won't somebody please think of the first time buyers, they're so cute and helpless, with their floppy ears and their big round eyes."

He didn't actually say that last bit.

He apparently did say, "all our futures are based on getting the property market going again."

Maybe when he says "all our futures", he just means his mates who bought 50 apartments off the plans in 2006.

Let's give Brian the benefit of the doubt and assume he really means that the future of Ireland is based on getting the property market going again. Then you could rephrase that as, "we've been in govt for 2 years now and we have done fuck all to replace the fantasy economy of the previous 10 years with a real economy built on something other than selling badly built houses to one-another using Germany's savings".

By giving all first time buyers a 5k/year tax break you just push up their bidding power by 10s of ks. You transfer wealth from our govt (that is cutting back on health and education) to landlords and investors trying to cut their losses in a falling market (owner-occupiers don't benefit unless they're selling up and leaving the country or something).

Of course this is not news to these people, this is the intended result (unless they really are mind-boggingly stupid - I give that about a 20% likelihood) and they know that no one is ever going to argue against helping first-time buyers. Every first time-buyer is a voter and the child of 2 more voters.

A rising property market can be either a bubble or the result of real prosperity. It's never the _cause_ of real prosperity (for the majority at least, whenever there are losers, there are of course some winners). Trying raise it directly is just a bad idea. It's a bit like trying to treat low blood pressure with a bicycle pump and a needle. You may well cause a brief spike in pressure but you're not going to like the end result.

Cross posted on

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