The housing crisis: Tinkering with a broken system

ONE of the simple laws of the market, or the jungle if you prefer, is that the more of a particular product is available the cheaper it will be.

The converse is the driver of most business plans behind corporate ambition. If supply cannot meet demand then price, invariably increasing, will be the decisive factor. It is a tragedy that this simple economic dynamic plays out so very loudly in our housing market. Those who control supply — developers, bankers, and, to some extent, planners and Government — will not build so many houses as to limit their profit potential. Property development is not, after all, a social service. It is a social necessity though.

That reality is behind the fact that house prices on average increased by 8% last year and that, in just the last quarter of last year, house prices rose by, on average, 9.2% in Cork and a chilling 14.6% in Waterford City. These are sobering figures for those who wish to buy a home but whose wages have not increased in line with this new reality.

They are also behind the fact that Taoiseach Enda Kenny has had to refute suggestions that as many as another 25,000 people could lose their homes in this shameful crisis. Fr Peter McVerry has warned half of the 50,000 homes in mortgage arrears of more than two years could be repossessed.

The only certainty in this tragedy is that current arrangements are unfit for purpose and that we must quickly reorder our priorities in the most radical way.