Ireland. The most expensive housing in western Europe

Can anybody explain why costs are so high here?

I see new 2-bed apts for sale in Birmingham for GBP 250-350k.

Why are they 675k here?

There is nobody to build the LA houses either.

Because people will pay it. It's not rocket science. As the recent election has shown the majority in this country are happy with their lot and they don't care about pulling the ladder up and leaving others stranded.

It does add up when you remember that people mostly share housing units, and that while those children are growing up, lots of other people will die.

The issue all over the Western World is that we took advantage of the low hanging fruit of suburban sprawl during our population booms. The problems with sprawl (traffic, insufficient densities to support services) resulted in policy makers looking to change course. And the walls they put up to stop sprawl (along with other regulations) have aided people's natural inclination to become NIMBYs. Along with this, globalisation has not really aided housing costs. Higher standards have eaten up any supply chain efficiencies and you cannot outsource manufacturing like you can other products. And you can't do cheap labour either.

Financialisation is a cute excuse people use when in reality it is a multi layered issue. The facts are the facts when it comes to construction costs of homes.

Why are people so obsessed with State builders? As pointed out elsewhere, do you think they'll be out there on a Friday afternoon when there is wet concrete and the weather hasn't been playing ball?

Public sector pay differential re_ private sector is more reflective of Union muscle than anything to do with how qualified the workers are ,your average clerical officer in the public secretary is answering phones, putting stamps on mail and asking their superiors whatever a member of the public has enquired about

Public sector wage levels are political

“Financialisation” is significant, as it is the largest political barrier to fixing the supply problem. Any proposal to increase housing supply will immediately be self-censored by politicians, worried about what their actions will do to “house prices”.

We have two problems: supply, and affordability. The first causes the second, but by not addressing the second problem we make it really hard to address the first in future. Forcing people to get in huge debt for modest houses means that when we try to loosen supply, they will find themselves in negative equity and will thus vehemently oppose the potential decline in prices. We have a ratcheting effect that only allows prices to rise.

There are lots of interventions that could be made to resolve the affordability problem by penalising high gains and thus slow the rise in pricing (e.g., heavily taxing above-inflation capital gains on residential sales and diverting that revenue into a fund for new building), but frankly, none of them will be popular with an electorate that believes the notional valuation of their house is actually real money, and they will have the effect of depressing private development, as those developers require huge prices just to turn a profit.

Speaking of developers, Ireland has an unusual arrangement where a “property developer” buys a patch of land and ends by selling with houses. In other countries that process is done by two different businesses: a land developer buys the ground, sorts the utilities and permissions, then sells (at a profit) that ready-to-go site to a house-builder, that then puts dwellings on it. Our system decreases turnover and so restricts the supply of building land: a developer who can afford to prepare a site but not build on it will just sit on the land until they can do both jobs. It also loads more risk onto the developers (they are exposed to all risks in the chain), which they will naturally try to offset by seeking higher prices for completed units.

There is not much sign of the government putting more pressure on the market.

The derelict land tax seems to be riddled with loopholes and collection of tax is low.

The implementation date was kicked down the road…

Yeah but to my point, it's not a question of how prices and supply.

I believe any connection in terms of motivation is tenuous and certainly not some grand scheming.

If you take the NPF (which artificially reduces the amount of land available in Dublin build and naturally increases prices), the goal isn't to keep development costs high. It's a mixture of politicians following public demand (how often do we hear about "balanced development"?) and also being backed up by Utopian planners who think if they say it, it will happen.

In terms of our housing market, we need to accept there is a web of reasons why it is like the way it is. There are micro motivations and policy wins over time that result in how we got to the situation we did today.

As mentioned in the article.

“What is striking is that the countries at the top [of home-price growth] are all Commonwealth countries that copied elements of the restrictive British planning system,” said Christian Hilber, a London School of Economics economist.

The article is here - https://archive.is/CVDyp - for anyone that cannot access it.

Still talking about the same problems and it will soon be 20 years since the crash. At some point people will grow up and realise the will to fix the housing crisis isn't there. The people making the decisions don't want to solve it but they sure will spend a fortune on PR people to tell you they are doing "everything humanly possible" to solve it.

This is the same public sector that regularly misses targets, yeah?

I asked a fairly simple question on how this would work for a sector that needs to be dynamic in terms of labour.

There's absolutely no need to have construction workers on the payroll, it's a total nonsense really and just a dreamed up "solution" by people who mostly have no clue on how construction works.

There is much larger demand for houses in Ireland and most of western world due to globalisation and inward migration. In the past it wasn't so easy to move to a western country from India and other countries, yes Britain had a large ex pat population but most other countries had more or less a static or declining population, I mean Ireland had a population of 3.5 million people for decades then the rapid rise over last 2 decades. Our infrastructure was built for that population and hasn't been able to gear up to the population we now have of over 5 million

The statement I took issue with is;

"Any proposal to increase housing supply will immediately be self-censored by politicians, worried about what their actions will do to “house prices”.

It's nonsense. The reference to the increase in house completions (no idea what you are on about with your "no offense" lark) was it does not comport to what actually happened. In terms of Europe, guess what, they also have a shortage (depending on the specific market it varies, I won't offend you by providing links as I'm sure you're already aware). But why was it that during the post Ukraine crash where house construction collapsed in Europe that it continued to grow in Ireland? It is because the Irish State had a wall of money put behind construction, not exactly comporting with your statement.

Wrong on 2009. We did not have an oversupply. We had some homes in the wrong places but overall, the "soft landing" should have occurred but didn't because of the information asymmetries in global markets.

My issue with your post is that is ascribes to this notion about some scheme to keep prices inflated. Demand had very much returned within a few years but the restart was delayed because (1) the practical reality that we drove away the construction industry (I know I know, Piketty doesn't have a chapter on that) and (2) the Central Bank were retooled and beefed up with a mandate for financial stability which constrained capital for both demand and supply.

In your argument, the latter follows this "self censoring" malarkey, in reality it was well meaning re-regulation after criticisms flowed from a banking and fiscal crisis that brought the country to it's knees.

Politicians are neither that smart or always motivated by that. It's a simplistic narrative that appeals to base instincts of some grand puppeteer. Adam Curtis documentaries are interesting, but don't make them your whole outlook on the world.

The starter home line is also really weird. The concept comes from 1950s America, not the 1980s and this grand financialisation wheeze you're on about. It's the notion of meeting people's income and wealth life cycle with a product they want.