Noonan blind to ‘housing bubble’
His comments indicate that people like him, who have been unaffected by the economic mess and cuts his political class created and inflicted, have learnt nothing and are reverting to type, aided by a meek and compliant media.
Mr Noonan is in his 70s, so he’ll remember how much his first house cost and how much he was earning then. One of his officials should show him the current average price of a house and the average salary, and then add on childcare and travel costs, and Mr Noonan will find that, even with two incomes, the figures do not add up, and that price inflation is still unsustainable when it exceeds four, five, six times salary.
Mr Noonan prefers to wallow in denial, like the previous, Fianna Fáil-led governments, because admitting that property is still overpriced in Ireland would mean facing up to the personal debt time-bomb he has been avoiding.
He would then have to explain to the public where the money went that the banks got when they sold their credit; where the money went that the banks received from the taxpayer when they were bailed out; and why the debts the banks claimed would default haven’t been wiped out. More worryingly, Mr Noonan would have to explain why his Department handed over billions from the Irish taxpayer to banks without verifying that the amounts being requested were backed up with empirical data.
Ireland is a small country and it is astounding that still there is no agreement between the banks and consumer advocate groups on a financial review of every person in the country to determine if their debt is sustainable. This would determine who can afford their debts and who can’t, and then a suitable policy could be devised.
But until then we have Mr Noonan continuing with the Fianna Fáil ‘head in the sand’ school of economic thought.
A family home should not cost more than three to four times the combined incomes of those applying for the mortgage. Instead of mortgage terms expanding into third and fourth decades, the price of a property in Ireland is still too high.
So what if you aren’t getting interest on your savings? Aren’t you lucky you have spare money to save. So what if you have negative equity? There are worse things than a hypothetical financial loss.
The real issue, which Mr Noonan has failed to address, is the assessment of whether or not people are carrying sustainable debt burdens.
Two people can have the same amount of debt, but if their incomes are vastly different, one is carrying a heavier debt burden.
This is the elephant in the room that this government, for ideological reasons, simply refuses to address, but, until it does, this issue prevents the domestic economy from recovering, which we need it to do before Ireland can build on credible sustainable economic growth, instead of pinning all its hopes on a few US tech firms.
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