Oireachtas Joint and Select Committees

Thursday, 27 November 2014

Joint Oireachtas Committee on Finance, Public Expenditure and Reform

Mortgage Insurance Schemes: Discussion

12:55 pm

Mr. Karl Deeter:

It is important to read the Central Bank's proposal carefully. Most of this is about bank protection; it is not going to solve the supply problem. No one is suggesting 100% mortgages, but 100% mortgages valued at seven times one's income have a lower default rate than 90% mortgages three or four times the income. How does one explain that? I do not know that it can be easily explained away given the empirical evidence. The empirical evidence does not indicate it solves anything to do with supply. The Canadians are saying they have had a positive supply experience but they probably did not have the type of oversupply and collapse we had. They did have a collapse in the early 1990s, and it was expensive and they learned hard lessons from it, just as the Americans did with the savings and loan crisis. However, if there is an absence of housing and one keeps people out of the market, it just means rents go up. Rents have an implication for capital values, and capital values increase. Therefore, there will still be a lifting on both sides, no matter what one tries to do to get away from it. No one has the alternative of some kind of substitution, which basically involves living in a box or something. That alternative does not exist in any of the categories, including social housing and private housing. I do not know whether this will fix anything concerning phenomena such as housing standards.

If one wants a conversation about what we need to do, it should cover the relaxing of building regulations. According to the building regulations, the height limit for new builds in Dublin is 13 m although a Georgian house is 21 m tall. How does one explain that? We are actually saying one must construct buildings that are lower than those built in 1710. There are many stupid things. Mr. Lyons did a piece on the television some days ago in which it was said one cannot construct a north-facing apartment. There are so many factors that prevent supply that I cannot really envisage how the proposal in question will resolve the problem.

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