REGISTER NOW!! Why? Because you can't do much without having been registered!

At the moment you have limited access to view all discussions - and most importantly, you haven't joined our community. What are you waiting for? Registration is fast, simple and absolutely free so please, join Join Talking Horses here!

Reply to thread

Message

I'm not following, clivex.

I was pointing out that the Irish central bank seem to believe that if you place a limit on the amount that house purchasers can borrow that it will slow down rising house prices.

I have often thought myself that many people choose to spend too much of their income on housing. They borrow the maximum allowed to them and buy something with it. When they are able to, they trade up and repeat the process. All this is based on a belief that houses are a good investment and that money paid in rent is dead money.

This creates a competitive spiral which results in everybody having to pay more for housing. But the quality of the houses themselves hasn't changed, if anything it's declining because newer units are meaner in size, and often in quality as well. If unchecked, this process ends in tears, as we all saw in Ireland.

The main mechanism governing all this is the amounts that people are able to borrow. By placing reduced limits on loan amounts the Irish central bank hopes to prevent prices from rising too quickly as the economy continues its recovery.

It seems logical to me and, in the short term at least, it seems to be working.

<blockquote data-quote="Grey" data-source="post: 2518783" data-attributes="member: 65112">I&#039;m not following, clivex.I was pointing out that the Irish central bank seem to believe that if you place a limit on the amount that house purchasers can borrow that it will slow down rising house prices. I have often thought myself that many people choose to spend too much of their income on housing. They borrow the maximum allowed to them and buy something with it. When they are able to, they trade up and repeat the process. All this is based on a belief that houses are a good investment and that money paid in rent is dead money. This creates a competitive spiral which results in everybody having to pay more for housing. But the quality of the houses themselves hasn&#039;t changed, if anything it&#039;s declining because newer units are meaner in size, and often in quality as well. If unchecked, this process ends in tears, as we all saw in Ireland. The main mechanism governing all this is the amounts that people are able to borrow. By placing reduced limits on loan amounts the Irish central bank hopes to prevent prices from rising too quickly as the economy continues its recovery.It seems logical to me and, in the short term at least, it seems to be working.</blockquote>

[QUOTE="Grey, post: 2518783, member: 65112"] I'm not following, clivex. I was pointing out that the Irish central bank seem to believe that if you place a limit on the amount that house purchasers can borrow that it will slow down rising house prices. I have often thought myself that many people choose to spend too much of their income on housing. They borrow the maximum allowed to them and buy something with it. When they are able to, they trade up and repeat the process. All this is based on a belief that houses are a good investment and that money paid in rent is dead money. This creates a competitive spiral which results in everybody having to pay more for housing. But the quality of the houses themselves hasn't changed, if anything it's declining because newer units are meaner in size, and often in quality as well. If unchecked, this process ends in tears, as we all saw in Ireland. The main mechanism governing all this is the amounts that people are able to borrow. By placing reduced limits on loan amounts the Irish central bank hopes to prevent prices from rising too quickly as the economy continues its recovery. It seems logical to me and, in the short term at least, it seems to be working. [/QUOTE]

Verification: 5 + 3 = ?