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How to solve the housing crisis – lessons from Germany

Housing supply, quality and price is not determined by some mystical accident – it’s decided by political policy.

And Irish government policies, shaped by ideology rather than practicality or reality, have brought about the worst possible outcomes – for the country, its citizens and the economy.

Time for a major rethink along German lines rather than moving the deckchairs on the Titanic….

An article by Eamonn Fingleton in Forbes magazine explains how that system works:

 

https://www.forbes.com/sites/eamonnfingleton/2014/02/02/in-worlds-best-run-economy-home-prices-just-keep-falling-because-thats-what-home-prices-are-supposed-to-do/#5a3b8cab6ad0

“By Eamonn Fingleton, Forbes contributor

 

When Americans travel abroad, the culture shocks tend to be unpleasant. Robert Locke’s experience was different. In buying a charming if rundown house in the picturesque German town of Goerlitz, he was surprised – very pleasantly – to find city officials second-guessing the deal. The price he had agreed was too high, they said, and in short order they forced the seller to reduce it by nearly one-third. The officials had the seller’s number because he had previously promised  to renovate the property and had failed to follow through.

As Locke, a retired historian, points out, the Goerlitz authorities’ attitude is a striking illustration of how differently the German economy works. Rather than keep their noses out of the economy, German officials glory in influencing market outcomes. While the Goerlitz authorities are probably exceptional in the degree to which they micromanage house prices, a fundamental principle of German economics is to keep housing costs stable and affordable.

It is hard to quarrel with the results. On figures cited in 2012 by the British housing consultant Colin Wiles, one-bedroom apartments in Berlin were then selling for as little as $55,000, and four-bedroom detached houses in the Rhineland for just $80,000. Broadly equivalent properties in New York City and Silicon Valley were selling for as much as ten times higher.

görlitz 1994

Goerlitz: picturesque — and tightly controlled. (Photo credit: chrisbulle)

Although conventional wisdom in the English-speaking world holds that bureaucratic intervention in prices makes for subpar outcomes, the fact is that the German economy is by any standards one of the world’s most successful. Just how successful is apparent in, for instance, international trade. At $238 billion in 2012, Germany’s current account surplus was the world’s largest. On a per-capita basis it was nearly 15 times China’s and was achieved while German workers were paid some of the world’s highest wages. Meanwhile German GDP growth has been among the highest of major economies in the last ten years and unemployment has been among the lowest.

On Wiles’s figures, German house prices in 2012 represented a 10 percent decrease in real terms compared to thirty years ago. That is a particularly astounding performance compared to the UK, where real prices rose by more than 230 percent in the same period. (Wiles’s commentaries can be read here and here.)

A key to the story is that German municipal authorities consistently increase housing supply by releasing land for development on a regular basis. The ultimate driver is a  central government policy of providing financial support to municipalities based on an up-to-date and accurate count of the number of residents in each area.

The German system moreover is deliberately structured to encourage renting rather than owning. Tenants enjoy strong rights and, provided they pay their rent, are virtually immune from eviction and even from significant rent increases.

Meanwhile demand for owner occupation is curbed by German regulation. German banks, for instance, are rarely permitted to lend more than 80 percent of the value of a property, thus a would-be home buyer first needs to accumulate a deposit of at least 20 percent. To cap it all, ownership of a home is subject to a serious consumption tax, while landlords are encouraged by favorable tax treatment to maximize the availability of rental properties.

How does all this contribute to Germany’s economic growth? Locke, a prominent critic of America’s latter-day enthusiasm for doctrinaire free-market solutions and a professor emeritus at the University of Hawaii, notes that a key outcome is that Germany’s managed housing market helps smooth the availability of labor. And by virtually eliminating  bubbles, the German system minimizes the sort of misallocation of resources that is more or less unavoidable in the Anglo-American boom-bust cycle. That cycle is exacerbated by tax incentives which encourage citizens to view home ownership as an investment, resulting in much hoarding and underutilization of space.

In the  German system moreover,  house-builders  rarely accumulate the huge large land banks that are such a dangerous distraction for U.S. house-builders like Pulte Homes, D. R. Horton, Lennar, and Toll Brothers. German house-builders just focus on building good-quality homes cheaply, secure in the knowledge that additional land will become available at reasonable cost when needed.

Locke is the co-author, with J.C. Spender, of Confronting Managerialism: How the Business Elite and Their Schools Threw Our Lives Out of Balance, a book I highly recommend.”

Wood You Believe it? A compact ‘Green’ Scandinavian style home with all modcons

The world’s happiest people live in Denmark. Detached from the rat race and soulless materialism, they focus on the essentials. 

Now you can too! 

A rare and unique opportunity to rent a compact sliver of Scandinavia-on-the-Southside, this cosy home is very much at one with the environment. 

Little separates you from the wonders and wistful essentials of wild nature, barely even walls or a roof. 

It’s almost like living in the wide open bountiful lap of Mother Nature herself. **

The surrounding locale of Terenure is to die for!***

Equipped with every convenience today’s renter could want except pesky divisive internal dividing walls, the immaculate open plan space will bring people together in a true spirit of togetherness and community. 

With views of nature and greenery visible from everywhere inside the property, it comes finished (almost) with high grade premium Norwegian pine walls, floors and ceilings at no extra cost. 

The last resident of this divine Nordic retreat has moved due to a need for treatment of blocked valves,**** or otherwise this little piece of Valhalla wouldn’t be on the market!  

To secure this super dooper residence like no other, contact us today at: SuperShedsAndOutlandishOuthouses@TitaniumNecks.gmail.com  

** Instead of someone’s back garden

*** Literally if you try to light a fire inside.

**** The lawnmower is making a full recovery under the tender ministrations  of Mick the Mechanic.  
*This actually a real ad on Daft! No, seriously someone is rely renting a garden shed: https://lovindublin.com/dublin/pics-there-is-an-actual-shed-on-daft-going-for-850-a-month*

Modest Holding in an InSpired Location

Well, we have had some truly terrific hovels featured on these pages before and loathe as we are to pick out just one magnificent dream home as the uber manifestation of what we all long for in a home, this latest entry onto the market is unique in so so many ways.

First the picket fence that envelops the property in a warm fuzzy embrace! Isn’t that the sine qua non, the piece de resistance and the cat’s pyjamas all rolled into one? Your eyes are out on stalks already, aren’t they? You can’t quite believe what you’re seeing and we’re selling, eh?

Never mind the fence is edgy red, none of that staid so-last-millenium white version – let’s face it only the KKK do white fences these days darlings – just feast your attention on the location.

Location is the watchword for quality honest estate agents everywhere. And us. And what a location – plum slap dab in the middle of Dublin’s main warzone thoroughfare: O’Connell Street. You can see the bright lights twinkling merrily in the soft-focused background above (not the blue flashing ones, they’re slightly different but let’s not get distracted) – yes, you did read that correctly, we’re not trying to pull the wool over your eyes or sell you a pig in a poke, you can live on O’Connell Street! The heart of beating beating heart of the city.

You can have your very own private verandah overlooking the nation’s prime boulevard and its never-ending cavalcade of colourful characters, exotic traffic and mellifluous ambience – you won’t believe your eyes or ears (or nose) if you’re lucky enough to secure a life less ordinary* at this exquisite address.

The site is choc full of opportunity for the ultimate glamping experience** that will be like nothing your imagination could conjure up*** We promise.

To view this very special Dublin residence, email us at: AtLeastItsNotSomalia@HolesForHabitation.com

Rental price guide: €1300 a month and one kidney as a deposit – in some circumstances the owner may accept contributions towards his hair transplant: one or two adult scalps.

 

*And possibly shorter.

**Own glamping equipment needed. Possibly stab-proof. Preferably armoured.

*** Unless your imagination gets off on mashing up Apocalypse Now, Alien and Trainspotting – in which case, perhaps we might, reluctantly, forego the pleasure of making your acquaintance.

A gardiner’s greenfingered paradise

 

You may have heard a property described as unique before, but this gem truly is a one-off.

We doubt you have ever seen anything like it – and perhaps never will again: opportunities like this don’t crop up everyday.

If you like nature and are a bit of a gardening fiend, this is the rental property for you. Live not just close to but – can you believe it – beside your vegetables (and we don’t mean your family or neighbours!).

Measuring 8ft by 4ft and with an aerodynamic 3ft in height (covered) or airy unlimited vertical vistas with the roof retracted, we recommmend a viewing to really appreciate what you would be getting yourself into.

Don’t delay, put down roots today!!

Email: topofthecrop@windowboxesareus.com

Picturesque Tree Enshrouded Chalet

Picturesque Tree Enshrouded Chalet
Picturesque Tree Enshrouded Chalet

Were you by any chance a reader as a child? Were you entranced and enraptured by the escapades of dear little Heidi in the Swiss Mountains?

Has your heart always been beating for a cosy chalet all of your very (Tobler)own? Tree enshrouded, with room for a goat and a full-throated morning yodel to welcome another glorious dawn?

Boy, do we have just the property for you!

Take those mental images of Alpine bliss and compare them to our picture – I know, right, it’s just completely impossible to tell the difference! It’s as if your dream took flight and landed in a comfy cul-de-sac in Dublin 2. True, we might have to substitute warm welcoming Irish concrete for cold unforgiving Swiss granite, but the rest remains unchanged.

The chalet comes complete with oodles of space – at one stage last year the landlord tells us she had 67 Brazilian students enjoying this bucolic retreat from the pressures of city life.

Now you can too! [Without the 67 Brazilians].

The chalet comes with hot and cold zephyrs of air, gently caressing you into slumber and on hand again to tickle you teasingly into a new day.

Your green sensibilities will not be disturbed by the wanton use of artificial plastic insulation – this wooden mini-palace is all genuine unadorned timber in the oh so a-la-mode style of uber-naturalism, unaffected and unspoilt by so much as a coat of paint.

Aspirations to a genuine rustic lifestyle are further enhanced by the local wildlife, with urban foxes, badgers and pine martens* often spotted frolicking nearby. The local population also frolic playfully in the neighbourhood, in different but no less entertaining ways – voices can often be heard warbling heartwarming lullabies in the inimitable argot of inner city Dublin.**

Dangers of sunburn and heatstroke are not only guarded against by Dublin’s innate temperate climate, but also by the shade provided by the soaring trees alongside (and slightly inside) the chalet – a scene that can conjure up a vista from the Tuscan countryside.

For this little piece of Swiss Alpine heaven melded with the best of Italian Tuscan palazzi, make your best offer to thejoyofsheds@weseeyoucomingrentals.com.

[Prospective renters are advised to bring a saw, as there have been some issues with entry and exit. Windows available on request.]

 

*Pine martens in Dublin are frequently mistaken for rats, but rest assured this is merely a trick of the light and a side effect of an urban diet on these cuddliest of creatures.

**Confirmation of content subject to translation by our anthropological consultants, Anto and Dec (Mounyjoy Creative Enterprises Ltd).