How far have we come?

toxic avenger wrote:

tonys wrote:

I believe it was completely natural for builders to keep building for as long as demand out stripped supply, up to '06. At that point the pendulum began to swing the other way, but these are medium term commitments, taking some years from beginning to end and I believe the change happened much faster than anyone thought possible and for reasons completely outside of our control and not foreseen by anyone, namely the US sub prime issue & following world wide credit crunch. The result is we have had a year and a half of over supply and a year and a half of putting the breaks on as fast as possible.

The tax plan would have been to gradually switch away from property taxes to a more broad based system, in the event we didn't get the time to do that. Not withstanding the mistake of not changing the tax base earlier, we all enjoyed the benefits of the huge property tax take, through low direct taxes & increased spend on services and infrastructure, so forgive me if I don't have much sympathy with the "I told you so's", the "everyone could see it coming" brigade & the "where did all the money go" simpletons.

Despite your aversion to people who say they saw it coming, I saw it, my dad saw it, virtually anyone who lived in London in the late 1980s saw it, all we didn't know was the exact date it would happen. Blaming US sub-prime isn't good enough, at least not on its own. The exact same thing was happening here, young people taking out 100 to 120 percent mortgages on houses they could never have hoped to afford, encouraged by politicians and the banks, told that the good times were here for ever, that downturns were a thing of the past. Meanwhile bankers were secretly putting their banks at insane risk, both through reckless lending in the mortgage sector and through their exposure on a select group of developers' land banks and retail developments, able to do so because of a cult of de-regulation (which, fair enough, was common to most English-speaking countries), one that had a particularly negative set of consequences here due to the type of people who were allowed to flourish in that environment. As to the 'where did all the money go simpletons', is it so bad for someone to ask whether 'rainy day' money should have been put aside instead of irresponsible profligacy, money wasted on pointless quangos and bureaucracy, buying elections, and buying off every interest group known to man? I would also take issue with the 'we all enjoyed' the property tax take, the rising tide did not lift all boats. The gap between rich and poor grew massively over the course of the decade, while areas such as Donegal and North Mayo hardly saw the boom at all, at least not that they'd have noticed. Ultimately the whole thing was indeed a house of cards after 2001, an illusory credit-based boom, tand had anyone in government been awake they'd have known that we were heading straight for the wall, US sub-prime or no US sub-prime. Instead they decided to hit the accelerator...

We did all enjoy the benefits and the rising tide did indeed lift all boats, the gap grew but the "poor" were very much less poor by the end of the '97 - '07 decade.

The rest of your points are just hindsight & more looking for someone to blame, show me the party manifesto from '97, '02 or '07 that said we should stop builders building houses or that we should reduce public services or that we should put a damper on the property market by increasing stamp duty or other property taxes.

I can show you two that said we should use the pension fund while we didn't need to, that BTW would be the pension fund that the Government of the day put away for a rainy day.

That the property market had gone insane some years ago, that young people were mortgaged up to the hilt on houses they could never hope to afford, that this was unsustainable, that the economy was over-reliant on property, and that there was a big crash coming, I'm afraid there's not even a hint of hindsight about it. I said it five years ago, because I saw it all happen before, to good friends of my family, in London 20 years ago.

cactus flower wrote:

tonys wrote:

cactus flower wrote:

tonys wrote:

cactus flower wrote:

House prices flattened off in 2006, two years before sub prime hit. The reliance on property tax was a bad idea from day one, not from last year. Excessive taxes on housing pushed up prices, adding pressures for wage increases to allow people to pay mortgages. Taking out a 30 year mortgage to pay government taxes (over 40% of purchase price) was in itself a mad position to put people into.

So, what are you suggesting?, that when property started to move at a pace outstripping supply '96/'97/'98 the government should have lowered taxes on them?, to what effect?

You are nearly 10 years wrong. Supply outstripped demand about 2006. Do you remember the Bacon Reports, queues to buy houses and prices shooting up?

Read my reply again.

Sorry tonys, you're right, I overlooked those words. I don't agree with them though - do you have any figures to back them up? By the early 1990s there was a serious build up of unmet demand for housing that added on to new household formation took some years to clear.

The point is that once the property market got going to the extent that demand was outstripping supply, the Government would have been very foolish to reduce the taxes on property, not only would it have made a bad situation worse, it would have only gone to increase the profit margin of the builder without helping the FTB and without the benefit of being able to pass on low direct taxes. The hindsighters now say these low taxes were a bad idea, but I don't remember anyone ever asking to pay more tax at the time.

Believe it or not some were advising that property related tax should have been increased!

toxic avenger wrote:

That the property market had gone insane some years ago, that young people were mortgaged up to the hilt on houses they could never hope to afford, that this was unsustainable, that the economy was over-reliant on property, and that there was a big crash coming, I'm afraid there's not even a hint of hindsight about it. I said it five years ago, because I saw it all happen before, to good friends of my family, in London 20 years ago.

We could go on about this until the cows come home and we still wouldn't agree, but I think I've shown at least that it's not as cut and dried as some like to think and that there is another side to the waste of time that is the blame game.

Squire wrote:

Believe it or not some were advising that property related tax should have been increased!

And they might have had a point.

Quote :

The point is that once the property market got going to the extent that demand was outstripping supply, the Government would have been very foolish to reduce the taxes on property

No one here is suggesting that. I was suggesting that point of sale taxes should have been kept lower from the beginning and a domestic rate (property tax) put in place. I've posted links to several articles dating from 2005 warning that things had reached a very dangerous point. All these things, including the loss of competitvity were pointed out over and over again at the time. The politicians chose to ignore them. I would include FG and Labour, as they abandoned effective opposition and in fact criticised FF for not spending enough.

cactus flower wrote:

I would include FG and Labour, as they abandoned effective opposition and in fact criticised FF for not spending enough.

They went mad. I was always told that in a boom a government should reduce spending and put money aside even if it is merely to pay off debt. Unfortunately in a democracy that is hard to do. Everyone wants new hospitals and schools. The time for governments to max spending is in a recession when rates are cheap and jobs are needed.

A post by Auditor on alleged property deal fraud has been moved to make a new thread - "Property Crash: Disputes, Disasters and Distress"

Any more response to evercloserunion's OP question -

Quote :

It now seems that there is a real threat of this vicarious experience of horrors past becoming a real and present horror. The terms "Good Friday generation" and "Celtic Tiger generation" risk losing all meaning, leaving the present generation as just the next one to experience to bitter cycle of hardship we all thought and hoped we had left behind.

Economically and politically, North and South: what has changed? How far have we really come?

Have we moved on? Is it back to the 70s and 80s or worse? Or are there permanent gains from the experience of the 1990s and 2000s ?