October 9, 2014

Central Bank has made first-time buyers reluctant tenants as rules favour landlords

Posted in Irish Independent · 39 comments ·
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The Central Bank has gone back to the future, dredging the 1970s for 21st century solutions to the dysfunctional housing market.

It has capped the amount of money that can be borrowed for a house to three times the household income and has stipulated that 80pc loan-to-value will now be the norm.

This is a move in the right direction, because it will help blow some froth off the housing market. It won’t reverse the price rises of the recent months, but it should slow them down.

However, like all policy moves, it will affect different people differently.

Raising deposits will help first-time buyers with rich parents. Young people who have relatively well-off parents will be able to get their hands on the deposit.

In contrast, lots of punters whose parents can’t afford a deposit will either not be able to compete, or might go elsewhere for term-loans.

With interest rates at 0pc, there will be other sources of money in the country, believe me.

Where there is competition between first-time buyers and cash buyers, this move will help the “cash buyer” who doesn’t need a deposit and will further incentivise the ‘one-off” landlord.

The “one-off’ landlord phenomenon is a bit like our “one-off” housing phenomenon. The one-off landlord is typically a landlord, for whom being a landlord is not his main source of income. It’s his nixer – a nixer for people with decent bank balances. They are the part-timers, buying property for their pension. Normally, the one-off landlord is in competition with the first-time buyer. The one-off landlord hopes to price the first-time buyer out and in so doing, make the first-time buyer his reluctant tenant.

By increasing the deposit needed, the scales will tip towards the one-off landlord.

As interest rates are likely to be very low for a very long time, there will be no return for money deposited in the banks and it would be quite reasonable to suggest that money will flow out of deposits into the housing market, swelling the ranks of one-off landlords.

One more factor that will attract the one-off landlord will be the fact that the latest move will probably cause rents to rise, because the first-time buyers who wanted to buy, will now have to revert to the rental market.

This will make the income/profit from property more attractive as higher rents will make the investment decision for landlords more compelling – at least in the short term.

However, while these are all the unintended consequences of the Central Bank’s move to limit credit, the alternative – a runaway housing bubble – where increased prices beget more increased prices, is unconscionable after what we’ve been through.

All policy should be looked at in terms of the alternative. There wasn’t much alternative open to the Central Bank. Indeed, this may be the beginning of a series of measures.

There can have been little doubt that, in the case of the Irish housing market – particularly the Dublin market – a bubble was emerging. Anything that seeks to break the link between credit extension and house-price increases has to be a good thing for everyone.

If banks are only permitted to lend three times a combined household income, then a dual-income house earning the average industrial wage would only be able to borrow €210,000 – which would price them out of most parts of Dublin.

While yesterday’s moves may alter demand, what about supply?

Houses prices tend to be self-reinforcing and are a function of the credit extended to them. If you limit the amount of a loan to 80pc rather than 100pc of the value, you, by definition, cool things down.

The Central Bank is also imposing an income cap on the amount of cash that can be lent. You can now only borrow three times the combined household income to buy a house.

So what does all this mean in practice?

The first thing that has to be recognised is Irish property buyers, in the main, want to live in a three-bed semi-detached house, even if public policy seems to want to push them into apartment living to contain the urban sprawl of the Dublin suburbs.

The new rules mean that the would-be borrower will need savings of €60,000 to buy a €300,000 home. According to the latest Daft.ie report from the ever-dependable Ronan Lyons, the average asking price in Dublin for a three-bedroomed family home – the residence most aspire to – is above €300,000; €60,000 is a lot of money for any first-time buyer to have saved.

There appears to be massive over-regulation in the Irish housing market right now.

Rocked by stories of maverick developers and “cowboy’ builders increasing prices overnight at the height of the last boom, the authorities have reacted to the crash by replacing not enough regulation, with too much regulation.

This is pushing up prices. For example, there now have to be lifts for every two flats in Dublin and basements with enough space for car parks. Also, apparently, builders aren’t allowed to build north-facing apartments anymore.

These are excessive regulations, which are pushing up the cost of building.

In addition, according to contractors, wages are almost double in Dublin what they are in Belfast and wages are close to half the total costs on a site.

Maybe this can help explain why Dublin has added 65,000 families to the population since 2008, but built just 25,000 units.

The Central Bank’s moves yesterday won’t solve supply, but at least it did something – which is far better than nothing.


  1. Adelaide

    Multiple analysis of housing markets historically show beyond doubt that average house prices are solely determined by the amount of credit available. If this proposed 3.5xincome cap comes into effect then average house prices in Ireland will be priced accordingly. Daft.ie are calculating the price to be 200k for an average salary couple.

    • Adelaide

      By the way, is it a coincidence the central bank announced this shortly after the conclusion of the Europe-wide Bank stress test? Or is the stress test still on-going?

      ps will Irish banks raise their interest rates to off-set this cap?

  2. McGoo

    I approve of the new lending restrictions, but giving almost 3 months advance notice of the change silly. It’s going to produce 3 months of panic buying, which will cause a spike in prices. Then, the lending changes will arrive, at exactly the same time as the CGT tax-break ends. An artificial price spike followed by 2 big changes that will exert downward pressure on prices!! Are they deliberately trying to cause another crash? Or this another one of those “own-goals” that we are so good at?

    • Ixelles

      Do you think it should have come in overnight or are you suggesting a longer lead time?

      If they gave a year’s notice, what would the effect be? It would lead to first-time buyers with deposits of less than 20% rushing in to buy in the next 10 months; buyers with big deposits would be wise to steer clear; every mortgage written in the next year would be of high LTV; a dip would follow and all of those who stampeded into the market would be in neg. equity.

      The only option was as short a lead-in time as possible. I agree that the ‘consultation’ process is a bit of an insult but that’s how it has to be.

      As for a rush in the next three months, how long does it take to close a sale and draw down a mortgage? If you ran around town trying to buy a house this month – and you fond one, and agreed a price – you’d be hard pressed to close it all by Christmas.

      For people at the early stages of a deal, no doubt this will put the pedal to the floor if they have deposits of less than 20%. But people bidding on a house next month will end up drawing down in 2015 under the new rules.

      • McGoo

        I meant that the lead time should have been shorter.
        I accept your point that 3 months may be too short for much panic buying. It depends if the new restrictions will be applied at the point of mortgage drawdown, or at the much earlier time of mortgage approval. I’m sure the banks could rush plenty of approvals through in 3 months.

  3. McGoo

    I don’t agree that the changes will drive up rents. Rents are ultimately determined by wages, and have already reached a level where they are unaffordable for many people. A lack of housing supply won’t induce renters to pay more than they can afford, it will induce them to move somewhere cheaper, either commuting further to work or looking for a new job in a more affordable location.

    • Adelaide

      Or induce renters to say to hell with it, “this is where I live and this is the rent I’m paying, otherwise get a bailiff to evict me and I’ll be seeing him in two years, in the meantime I hope you can afford your legal fees. I’m sorry, but I genuinely have nothing left to lose.”

      • Ailish Connelly

        Well Adelaide, this is not the first tme I have read your inducements to law breaking in your comments. Incitement to hatred of landlords too eh, to add to your repertoire. Lovely. Ok so let me enlghten you to some facts from renting out property on behalf of an elderly relative, who is trying to cover high nursing home fees. During the downturn Landlords were forced to lower rents, capitalism at work, unlike the story of our banks.
        Then the market improves somewhat and demand improves and landlords raise the rent. They have to make hay while they can, they don’t do it for the pat on the back because believe me, there are easier ways to make money, with a whole lot less hassle. I have had to shell out tens of thousands on damaged property, damaged furniture, filthy ex tenants who would leave one despairing of humanity. Skip loads of crap left behind for the landlord or agent to sort, bills not paid, rent owing. And you think its a great idea not to pay the rent. Why should anyone else pay your rent? Why should a private landlord have to go to court to recover property because you decided that you didn’t like to pay rent and pay the exhorbitant fees for lawyers, because someone tried to provide for their old age or nest egg or whatever rather than hope the government would find its social conscience and provide for them? Would you pay my elderly relatives nursing home fees? No, thought not. I do not agree with overcharging for rent and I never have but if rents rise then as any business person will tell you, one has to try recover some value to make up for harder times when one is hammered. And don’t forget every euro in rent is taxed to the hilt, there are huge running costs to any rental property, note in particular the reams of edicts coming from Europe which demands so many tiny upgrades that often make it uneconomial to cother ones arse renting out a property, and if one does it properly and looks after a place, this all cuts down on the income from a property. Also, private landlords provide a useful public service in housing people. If you push them to the wall then their means to provide this service goes and a lot of people would remain unhoused. But of course you have thought of all this, in between your little rant about rents and landlords etc. Perhaps you are finding it hard to cover your rent and if you are you have my sympathies, but to incite law breaking and possible hatred against people merely trying to make an extra bit of income, and encouraging tenants to let landlords pick up their water bills too (yes that was in one of your other opus’) well I for one think you are going a tad too far! And now thats the end of my rant! Good day.

        • good one Ailish. I had 20 suites in two buildings at one point and can echo your statements.

          Even with rental protection through a rental Act such as the Residential Tenancy Act of BC the landlord got the worst of the bargain.
          Many times if a dispute was arbitrated the results were different depending if you were the tenant or the landlord.
          a tenant winning an award was allowed to deduct the amount from future rent payable thereby being effectively paid and the law acting as a collection agency.
          It is different for the landlord. A landlord winning the dispute and gaining an award from the tenant is left with little means of collection. The tenant in many cases was long gone. Collection had to be through the small debts court . time effort and waving the “award ” to a judge meant little in collection even if the tenant is ordered to do so.
          small amounts or larger were uncollectible and the judge would order a paltry monthly amount to be paid.

          The best protection a landlord has is to do a character reference check and a credit check and use a standard process to examine each applicant so as not to be accused of discrimination.

          i am out of the property market now and in other forms of saving. The more regulation and abuse given the landlord the less rental property will be available. Thus rents rise and and property prices of owner occupied property go up.

          Those who despise the landlord are authors collectively of their own misfortune.

          • mcsean2163

            I too had the misfortune of being a landlord for a while, whilst renting myself elsewhere. At one stage the tenant decided he was paying too much and lowered his rent! From what I heard if it goes to the prtb, it could be 6 months or more before the non-paying tenant is evicted.
            I used to think easy money but if you have a full time job and you have to spend your evenings crawling around in an article so the mortgage will be paid ….

            We eventually flipped the house and just about broke even!

          • Daniel Waxonov

            Adelaide – a law breaker? When exactly did she say that “it’s a great idea not to pay the rent” When ? An inciter of hatred? Adelaide?lol Maybe some here,including the newbie, have conveniently taken outta context Adelaide’s contribution recently that “the Irish hate each other”.She didn’t mean ‘hate’ in a literal sense of course, but merely a colloquial expression of dislike. She gets a teanga lasadh for sharing on a blog, how she see things?I ‘hate’ Ryan Tubridy,but i don’t want the man dead ffs.

            One or two [perceived] slips,faux pas,and with a twist of the facts,in an emotional rant and an implicit threat of being possibly ostracised…what a shaaam!

            Luckily she has more sense than to take seriously such rubbish!

        • juniorjb

          On the other hand, as any business person will tell you, when we want more income for our businesses we usually have to do something extra to get it, like work harder or smarter or offer a better service. We don’t usually get to just up our prices by much. And just try using the law to recover any unpaid bills, not just rent, it doesn’t work all that well for anyone, unless you have plenty of time and money to spare. You usually have to wear out some shoe leather and your patience. It’s difficult to force people to pay up if they want to be awkward. It’s not fair, but that’s business, you want profits, you have to work for them and take the risks. In any case, Adelaide only talks about this hypothetical person would refusing the rent INCREASE, not refusing to pay any rent at all.

          • Daniel Waxonov

            Sweating the asset is fine when it’s maybe a machine bangin’ out metal nails ,but as a landlord, dealing with people,well,not so much.

            Off topic completely but friends are staying with me and their 10 month old little boy has his 8″ touch screen and his parents showed me software they had downloaded,where one of the programmes was a video of ten Kinder eggs ( plastic capsule encased in light chocolate with a plastic toy inside) being slowly unwrapped ,one by one,by a pair of human hands and each time revealing the toy inside.Repeated over and over again,ten times.I couldn’t believe my eyes.

            It’s like the surprise factor,the discovery element for the child is cheapened,the child’s mind being de-sensitised and DENIED the exhilaration of discovery,but at 10 month old??!They sure are starting [the poisoning of minds] ‘em young now in 2014!

            Speaking of brainwashing,let’s listen to the much loved [reductionist and genocidalist] David Attenborough ‘wrap up’ one of his episodes, in a fashion that has got to shock and distress anyone.

            http://www.tubechop.com/watch/3702386

            question everything

      • DB4545

        Adelaide if you tried the same tactic in a taxi or restaurant some might say that you tried to obtain goods or services by deception. If you signed a lease (i.e. a legal contract) and then want to break that contract why do you feel that you should then have the right to continue to obtain a service that you refuse to pay for? I’m sure you wouldn’t work free of charge why should a landlord provide you with a rental property free of charge?

      • Daniel Waxonov

        [And for the record,ive heard of many landlords who have offered to pay their tenants' water bills- in an effort to keep tenants happy and in situ]

        And maybe this is the fallout from the poisonous sense of rivalry and monetarism [rather than a sense of community and togetherness],this survival of the fittest culture which is now surfacing…the fallout of the keeping-up-with-the-Joneses.

        Let’s have a look at what Adelaide did actually say ; “…I’m sorry,but I genuinely have nothing left to lose”.

        What I read into that was Adelaide’s [ who we remember, travels the country day in/day out,speaking with members of the public at petrol stations/cafes up and down the island ,speaking with her clients (business owners) and their staff and meeting with Joe and Jane Public who she can see are at the end of their tether,, i ndeireadh na dála ,with enforced austerity programmes,stealth taxes,flatlining wages,inflated prices and she witnesses the despair.

        • Daniel Waxonov

          The feeling of being powerless,not listened to by politicians,future looking bleak,but the sheeple(me included) are waking up- that we all are the prey,and all the while watching the ship sink,the ever present “I feel like I just can’t cope with any more stress” and “when will this misery end?”and “I feel like I’m being backed into a corner” fearful state of mind, that our Gov’t is wilfully orchestrating in it’s citizens and where’s my future and my childrens’ future? That’s what i understood from “i’m sorry, but I genuinely have nothing left to lose.”

          I might recommend a more productive approach by directing your anger and frustration at a far more deserving target – Inda, the assassin, “the errand boy,sent by grocery clerks, to collect a bill”

          There’s an armada of vulture funds heading our way.They are the enemy and anyone who colludes with them.

          short
          http://www.youtube.com/watch?v=SKm36o0ZUWI

  4. Grzegorz Kolodziej

    I am still waiting for David to write an article on what will happen to all those empty houses. I see the Dublin mini-bubble as the resultant of both supply (or lack thereof) and demand (driven by ECB releveraging of the European economy – releveraging – if I am not mistaken, advocated by David for years in his Keynesian paradigm, the foreign vulture hedge funds being only the tip of the iceberg).

    Did we not hear only 2 years ago that it will take us 43 years to fill all empty houses?:

    http://www.independent.ie/business/irish/itll-take-us-43-years-to-fill-all-empty-houses-26863864.html

  5. Bamboo

    In the previous article GF brought up a very valid point. The dilemma between buying or renting. GF said: “But I need a home for my family. The lack of security I have renting keeps me awake at night.” This touches the subject to the core.

    While one half of the population is looking for a family home the other half is looking to make money out of the whole shambolic situation.

    My own children are now in their late twenties and mid-thirties and they are all starting their own families. I have no debts but I was made redundant 5 years ago. I am not able to give any financial handouts but fortunately I’ve been able to extend my own family home so at least two couples can live very happy and comfortable while retaining their privacy. All you need is some imagination in re-doing your own home and let go the old style of living and the silly comforts.

    My wife and myself have decided to move out of Ireland to live cheaply abroad so that we can release the family home to our children and their partners. Instead of each couple paying at least a 1000 euros they are paying me 400 euros (each couple). That gives me an income of 800 euros a month. Fortunately we have found work abroad as well. I am now renting a new house (550 Euros/month)It is a house that probably fetches 2500 Euros (easily) a month in Dublin.
    We left everything behind and we started all over again abroad. We will have to stay abroad for a couple of years in order to let them save some money and hopefully it will work out.

    It is maybe an idea for other parents to do the same.

  6. “The one-off landlord hopes to price the first-time buyer out and in so doing, make the first-time buyer his reluctant tenant.”

    Get real David. This is a totally biased unsubstantiated statement and akin to agitating class warfare. It is totally irresponsible.

    By the time the first time buyer gets a taste of the responsibility of home ownership they may be happy to revert to renting. Why they would have to unblock their own toilets and change the tap washers and paint and scrape and clean for themselves. a lot will have trouble paying for professional fees for the foregoing and services so will have to resort to looking after themselves.Mortgage payments are only half of the expense of ownership.

    • juniorjb

      A couple are paying 1400 a month in rent. They hope to start a family and so wish for security and want to buy a house. They find it difficult to raise the deposit while paying this rent. They are faced with higher house prices as more money moves into the buy-to-let market. They are thus forced to continue renting, further securing the landlords position. That seems to be what David is saying. Now that looks reasonable enough to me if we tone down the fireworks, no?

      • The more houses put on the market to rent. The lower the rents will be.
        Works both ways, does it not. Simple economics principle.

        • juniorjb

          If you can wait around long enough for that to happen and nothing else changes in the meantime then yes, simple it is. Doesn’t really do much for our couple in the long term either, given the ultimate transfer of wealth from renter to landlord, they will still be worse off overall and inadequately housed for their needs and preferences. I think that still supports David’s point. You might try switching off the bumptiousness in your replies as well or I’ll have to go back to ignoring you. A bit of civility costs nothing. Simple economics principle.

          • One of your fundamental rights is to remain silent

          • juniorjb

            You just can’t help yourself, can you, Tony? Put the rattle back in his pram, someone.

          • Have a nice day Juniour, :)

          • juniorjb

            Interesting Tony. Apart from a bit of argle-bargle you don’t have any real point and then your argumentative strategy is to be trivial and impertinent, finally resorting to telling me to shut up! You’re a fraud, Tony.

          • Juniour.

            I have simply observed that you have the right to remain silent if you wish. I suppose you have the rights to not be silent if you wish not to be silent.

            I have not suggested to you that you should do anything at all despite what you seem to think.

            lets be cordial as you suggest.

            I hope you enjoy this evening and sleep well and look forward to continuing satisfaction in your life in general.

            I am having a great time here in Provence but in a week will be returned to Canada. The wine, cheeses, duck and foie gras have been delightful, and the scenery spectacular. I will have many good memories to look back on.

            I wish similar memories for you too.

        • juniorjb

          Bon appetit then. Might be a bit too rich though, watch it doesn’t make you slow and windy.

  7. douglaskastle

    Sorta related, but slightly off topic. We went sale agreed on a property last May. An elderly couple looking to down size. We thought things were going well, we got the surveyor out, it all looked good so we requested contracts. Then silence, for 2 months. Then they start looking for a move in date in December. We didn’t like it, but we eventually agreed to it. OK, 1st of December, we didn’t hear any thing until they decided to look for more money, nearly 5% more. We didn’t want to, but we said we’d maybe negotiate on price if they could lock in a date. That was two weeks ago, we have not heard back on that. So much for negotiation.

    Today they come back and say they want to pull out of the sale. The quasi line we are getting from the real estate agent is that the price of units they want to move into are getting to expensive. I can’t argue against that, except it is today, when the paper are all ablurb about a sales spike before the end of the year due to the changes in mortgage approval amounts.

    This is the second house we have tried to buy this year that we couldn’t and didn’t actually get sold. Another house out in Old Bawn sat on the market for months, we placed a bid, we were allegedly out bid, we pulled out close to the asking price, The house sat there for at least 2 months, it never went sale agreed or sold, one day the signs just came down.

    In both cases we couldn’t get any information from the actual sellers, all communications are being controlled via the real estate agent. My take away from both is that the real estate agent have too much power and I feel that they are making information work for them. I doubt that half the counter bids we bid against even existed, but how do you prove it? In this recent case I wouldn’t be surprised if the current real estate agent is whispering in their ear to get the property back on the market to catch some of this increased heat.

    I moved back from Oz hoping Ireland had changed. However it looks like the property market employees have a unique set of skills, a leopard doesn’t change it spots even in the face of a 5 year recession. The reality that we have observed is that there is the advertised market and the real market, and you can only find out the real market by getting up Saturday mornings tramp around the county for months.

    Sorry for my paranoid rant, but it has been a frustrating experience, and it is not over yet.

    • DB4545

      Went to look at a house in Dublin 7 a few months ago. Knowing the games that these assholes play I had someone else checking the bids and just like you I was bidding against myself. The house described as “walk in condition” needed 40K of work (a total refurbishment). The house went 50K over the initial asking price without factoring in the refurbishment costs. Some poor gobshite got stung for 90K in additional costs for a two bed terrace that wasn’t even worth the initial asking price. From what I read and hear Oz has the same problems. These jackals are universal and know that the rewards are higher and the risks are lower than doing armed robberies. Their ethics and morals are identical to the armed robber but to the victim a suit can be more persuasive than a shotgun.

  8. http://blog.milesfranklin.com/just-50-million-of-silver-left-thats-it

    Central banks have literally been handed a blank cheque. They are responsible to no one for their actions. They invest money out of thin air and charge interest on this imaginary currency. That interest has not been and never is created. So anyone paying interest to any one including the banks and central banks must get the currency from some one else’s loan. As interest is paid to a bank the currency used to pay the interest is removed from circulation thereby reducing the money in circulation. To compensate for this more loans must be made to others to increase the money supply.

    In the meantime not a penny of principle has been paid off and so gradually, at first, the interest charges to the economy get larger and larger. The debts get bigger and bigger. Increasing the currency in circulation must continually accelerate. today we have reached saturation in both debt and interest on that debt that can be handled by the production of the people.

    If the debts were reduced and even paid off there would be no money in circulation and the economy would collapse. So we can not pay off the debts.
    Interest payments have been reduced to near zero but still comprise too much siphoning off of the productive process so the economy suffers. Can we reduce interest to zero. Maybe but the debt is still there and increasing.

    The amount of currency needed to remain stable in the economy has risen to the parabolic stage when viewing a chart on the money production of the central banks. This to little good effect but even negative effect on the economy.

    As all new money issued is also debt and as only issued as a loan the indebtedness is also exponential.

    Seems like there is no solution to other than a gigantic reset or put another way a giant crash.

    All figures properly calculated show we are in a world depression of epic proportions and it will become apparent if not already apparent, to the average worker. Real wages are dropping for 45 years. Purchasing power is 45% of what it was in 1970. (that is an hours labour buys less than half what it used to).

    Debating all these side issues is distracting and draws attention away from this single issue that will resolve all others if fixed.

    we need to remove the central bankers, replace the central bank fiat currency with interest free, debt free treasury bills backed by the full faith and credit
    of the state. Then freeze the amount of currency in circulation and repeal the legal tender laws.

    Then real money (precious metals)needs to be held in the custody of the state and used to back the paper treasury money. (any amount is ok for the job but the more Precious metal held the better the currency will be valued.

    In the meantime as an individual trying to stay ahead of the game, consider saving in ounces of precious metals. By bullion of one form or another and take it home and stash it. Junk silver coins are best. then silver and gold coin. Do not by any paper representation of any precious metals. you will be left holding paper. A bit like a worthless bonds or stocks.

    Your current 10% down payment held in PM’s might buy a whole house for cash within ten years.

    Keep the faith. You need not go down with the ship if you have a good safety flotation device.

  9. McGoo

    I just came across a report, prepared by the National Institute for Regional and Spatial awareness (NIRSA) in 2012, that contains the following line in the conclusions:

    “The priority should be to tighten supply and demand to the
    point where households are competing for property – starting
    to build before this will flatline the market”.

    In other words: don’t build houses, we want a shortage, to get prices rising.

    So, the current situation was not due to the government ignoring the growing housing shortage, THEY DELIBERATLY CREATED THE SHORTAGE!!!

    http://www.ucd.ie/geary/static/podcasts/ieconf/presentations/RobKitchin.pdf

    • Deco

      +1.

      This is a key objective as it helps “save the banks”.

      If the banks are not being bailed out the clowns in the IT BS would go ape. Suds would be a very unhappy puppy. John Bruton would be in fury.

      Anything other than saving the banks would be “populism”. And in this corporate age, “populism” is the ultimate form of heresy.

  10. DB4545

    “Wages are almost double in Dublin what they are in Belfast”. Considering that people in the North are covered by the British National Health Service (no 50 Euro fee for a doctor, 180 Euro for a consultant and relatively minor prescription charges) that’s a major cost saving for employees and therefore a cost that employers in the North don’t have to factor into wages. Couple that with capital costs for a car at 65% of costs in the South, low car tax and NO toll roads and subtract that from the costs when calculating pay rates. Factor in extremely competitive supermarket chains (and consumer watchdogs with real teeth) and subtract that from the cost of food and related services when calculating pay rates. Factor in also realistic house prices that never got to our levels of insanity and the impact that has for average person paying a mortgage. Factor in 52% tax rates in the South for average people in return for very little by way of public services. That’s why pay rates are almost double those of Belfast and why such comparisons are offensive and misleading. How much do consultants and doctors earn in the North?

    • Deco

      NI is a subsidized economy. In a subsidized economy the objective is to keep costs down, to enable the objective of survival

      The ROI is a leveraged economy. In a leveraged economy the objective is to push up the cost base, so that everybody can be leveraged for expansion. Survival is not an option. It is about gearing everything for more debt, and more expansion (regardless of the economics).

      • DB4545

        I get that Deco. The spin is that “costs are too high” “the average worker is overpaid” compared with Belfast/Europe/USA/South America/China (take your pick) without factoring in local costs. People may pay high taxes in Scandinavia but at least they get a high standard of service in return. We get 52% stolen from our wages with minimal or non-existent services. The net effect is that any product or service that you purchase actually costs you double the stated price when income tax is factored in i.e. you have to earn 200 Euro to get 100 Euro net after tax.

  11. Deco

    At the crux of the matter is the issue of supply and demand of housing.

    Of course it is a mess, for the market participants. That is an outcome, of priority being given to other objectives.

    And the objective, since the time that the banks went to the wall, was to rebuild bank balance sheets.

    Society is not a priority. The banks come first. What is required now is “window dressing” to make it look as if society is a concern.

    This is where the noise about a “social housing” program comes in. To create a pretence that the entire thing is not some kind of racket.

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