IRISH TIMES, CHEERLEADERS FOR SPECULATION
Jun 18th, 2009 by Conor McCabe
It’s only been a year, but let us not forget that when it comes to cutting social welfare as a form of economic “pragmatism”, this is the Irish Times with some typical “pragmatic” economic advice.
From 4 April 2008.
Enjoy.
“BUYING A HOUSE CAN NOW BEAT RENTING
AFFORDABILITY FOR first-time buyers continues to improve as house prices fall, according to the latest edition of the EBS/DKM Affordability Index. Laura Slattery reports.
The average first-time buying couple is better off buying than renting today if they intend to keep their property for more than three years, according to an analysis by DKM Economic Consultants - even if Irish property prices fall as much as 10 per cent in 2008.
The affordability index, published by Irish Property Buyer, indicates people buying their first home in 2008 will spend 21.9 per cent of their disposable incomes on mortgage repayments, as prices fall and higher rates of mortgage interest tax relief come into effect.
Overall, the slice of income needed to pay the mortgage on an averagely priced house has dropped from more than 26 per cent in December 2006 and 23 per cent in December 2007.
People buying a property with the average Dublin price-tag in March are spending 26.6 per cent of their incomes on their mortgages, compared to 32.5 per cent if they bought in December 2006 and 27.6 per cent if they bought in December 2007.
EBS and DKM say affordability will continue to improve as the year progresses, making it easier for first-time buyers to get on the property ladder.
But EBS director Dara Deering said potential buyers were adopting a “wait-and-see” approach. Demand from people who did not want to buy property at the top of the market, or who foresaw further significant declines, made rents increase 12 per cent last year.
But Ms Deering said the “tipping point” between people renting and buying was now close.
Typical first-time buyers are better off buying than renting, DKM director Annette Hughes said. The consultants assume prices will fall 10 per cent this year, before rising at an average of 3 per cent over the next six years.
“By year four, the buyer would be better off by almost [euro]5,000, and by year seven - even after selling his property and paying transaction costs - the buyer would be better off by almost [euro]41,000,” Ms Hughes said.
The responses from journalists and editors on the accusation of cheerleading is interesting. The following is taken from the recent Media Bite article Don’t Shoot the Messenger, which we pointed to recently on ILR:
Over the last year or so we have been in contact with a number of journalists from Ireland’s broadsheets, seeking their views on the media / property relationship. We asked why the issue has been ignored and suggested that the topic deserved open discussion - that perhaps it pointed towards a deeper issue of compromise between funding and journalism. Surprisingly, and without exception, journalists agreed that this was indeed an unhealthy relationship.
Although we have agreed not to make these conversations public, we thought it was worth sharing some of these media insider thoughts with you. Though the authority is somewhat lost given the anonymous nature of these quotes, they are nonetheless valuable insights and admissions.
Reacting to our point that “the Irish media is deeply complicit in the financial crisis, by virtue of its self-evident vested interest in the speculative bubble,” one journalist had this to say:
another responded:
and another:
Commenting on one of the deluge of articles about opportunities for overseas property buyers, one journalist explained their predicament:
And another responded on the failure to identify the warning signs:
Someone should tell they guy or gal that the Berlin Wall came down twenty years ago.