There is always a market for everything as long as you have the right to private property.
What ‘commentators’ mean that there isn’t a market in property at the moment is that the market is not ‘clearing’, there are no transactions.
That is because buyers and sellers cannot agree on prices. Agreed, it doesn’t help that the banks are a bit constrained from lending. But whenever you hear of substantial price reductions you hear of houses being sold, often many houses on the one estate.
The sellers don’t want to reduce prices to the level that people are willing to pay because it means that they will have to take losses. The sellers are huge businesses, our biggest in fact, they are our banks. And because the banks can no longer persuade you to buy at prices that suit them, they are using their power and access and muscle to suborn the State and manipulate the Govt into buying the property using your money at a price that suits them.
To my mind, that looks like a financial ‘coup d’etat’. But, even if you don’t accept that labelling of what is happening in Ireland today, you must agree that this represents the greatest single market manipulation ever seen, proportionately, in any OECD economy. And some of you still think that the Govt. rules on your behalf.
The buyers have woken up to the nonsense that property can only go up. They have seen their friends take losses. They have seen their incomes reduce and their jobs go. They will not be conned for another generation.
Terry McDonagh of GalwayNUI reminded us on Sunday that prices, especially prices for ‘investments’ (such as houses) are determined by what the long term expected future value of the asset should be. Peoples expectations have changed and rightly so. But the banks are ‘long’ these assets and want someone to buy them at yesterdays price.
Why does the taxpayer have to pay for the bankers mistake.