This headline appeared in the Indo today. We agree with the idea of a safer market, but also agree with the ESRI on this, that it was badly timed, inappropriate and will actually cause more problems than it fixes due to being badly timed.
We would agree, our submission on the subject was one of the few that articulated the problems, why the moves wouldn’t prevent boom-bust and gave empirical evidence supporting same. Meanwhile many others were falling over themselves to commend Patrick Honohan and the Central Bank for being such good regulators.
They may have insulated the banks, but it’s at the expense of a market that will not provide for all of the people that need housing, in doing this it also helps to encourage speculation as one by-product is higher yields which re-attract investors into a market.
The ESRI have articulated this better than we did, and we support their findings. Oddly, the person behind the statements was the best economist the Central Bank had on housing, Kieran McQuinn, who moved to the ESRI a few years ago. So it isn’t as if the detraction comes from a person who doesn’t know the inside story.
In time the error will be realised, it will be to late to correct, but hopefully it will mean more nuanced and measured approaches to regulation will be the outcome rather than rushed through ideas that were so clearly ill thought out.