Rising rents will be followed by higher prices.

The lesser discussed problem of rising rents will be the rising prices of the next few years, we see it as a foregone conclusion that price pressure will be upwards as long as rents are rising.

This occurs for several reasons, first is that higher rents compel renters into the purchasing space, those that can move must have sufficient savings and earnings to do so, but equally, those that can afford high rents – and to escape them via a purchase, are exactly the ones who will make that choice.

There is a tricky relationship between rents and prices, but as can be seen from the chart showing the last 25yrs there is some correlation.

What we can see is that often when rents are rising that prices then catch up, at times rents can even be falling and prices still go up – this is perhaps due to the delayed nature of the commitment to a property contract which can be long drawn out.

What you don’t see for long in that chart is rents rising …

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RTE 1 O’Clock News: Housing crisis and what can be done in the budget to help

Today on the 1 O’clock News on RTE Radio 1 we were asked to consider things which the budget could do to help achieve some stability in the housing market.

We echoed the Construction Industry Federation for a call to end ‘Part V’ contributions as this is a 20% tax levied only on new homes which is meant to provide for social housing. This is a mistake, social housing is a society wide responsibility and should not be put only on the shoulders of new home buyers.

Other ideas included ending development levies and dropping the VAT rate while also being mindful of the rented sector.

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Newstalk: Catastrophic recovery, Lunchtime’s Jonathan Healy speaks to Irish Mortgage Brokers

The idea of a ‘catastrophic recovery’ is one where in getting better there are many victims, we feel that’s an appropriate description for the Irish property market as it bounces back.

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Should we consider scrapping any gains tax on sites temporarily?

If we are to look at housing (at least in Dublin) as being of a crisis nature then perhaps we should consider some bold moves that might bring land into play that otherwise wouldn’t make it.

The talk of a site tax is a good idea, it was the tax we were meant to get from the beginning before the government reneged on their stance for it. This will help create a ‘use it or lose it’ aspect to land holding. The second trick is to encourage movement.

Scrapping the 80% windfall tax would be a start, but most of the site with planning don’t fall into that category, so perhaps scrapping Capital Gains Tax on any site sold (with planning) in 2014 would be a start. The reason for this, and the issue it intends to resolve, is that many sites have insolvent owners, or people too highly leveraged to make the site viable.

Getting rid of the 33% tax (which is harsher than it used to be because the tax …

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RTE Drivetime: Mary Wilson speaks to Irish Mortgage Brokers

Mary Wilson spoke to Karl Deeter about some of the housing issues being faced by the country on RTE’s Drivetime. The point was made that lowering cost is a better idea than ramping up credit.

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