Housing is the biggest problem facing the State, and this Government’s budget interventions are contradictory and short-sighted
Minister for Public Expenditure Paschal Donohoe and Minister for Finance Michael McGrath during a budget phone-in show at RTE studios, Dublin, on Wednesday. Photograph: Gareth Chaney/Collins Photos
The State’s primary objective should be – and this Government’s chance of re-election rests on – making homes available to people at an affordable price. Prices are too high on every metric so we are talking about price reductions. An obvious way to reduce house prices is via the cost of borrowing. If interest rates rise – which they have done 10 times over the past 20 months – the cost of borrowing rises and the amount of money people can prudently borrow falls.
Let’s examine the budget contradictions in housing and bear in mind that the real problem is not enough homes. Let’s restate that the aim of Government policy when it comes to homes should be to build, not to tinker about with one-off taxes.It’s time for the State to declare war on dereliction And how will the Government avoid this “once-off” from recurring every time we see a bump in interest rates? If recurring it means that houses are a one-way bet, when interest rates rise the State introduces a tax break so house prices go up. House prices, therefore, go up whether interest rates rise or fall!
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