After all, one of the major things that fuelled the Celtic Tiger was the housing and construction boom. Obviously we don’t want to get back to a stage where there is reckless lending and we’re building homes simply for the sake of it but there is a need to get back to some form of market normality.
As many houses as there are lying idle around the country, there will be a need for some construction to take place in the coming years due to stock shortages in certain key areas, particularly in the capital.
The government are only too well aware of the importance the property market can play in reviving the economy, hence the incentives they introduced in last year’s Budget such as additional mortgage interest relief for first time buyers.
However, as we head towards this December’s Budget they need to be mindful of the damage they could cause to the industry as well.
This week alone we learnt that more than one in three mortgage applications were being turned down, while another report from Karl Deeter of the Irish Mortgage Brokers found that families were being deducted €50,000 from any potential mortgage per child they had.
That is deeply worrying at a time when the traditional model has reversed. In the past, usually what happened was that people settled down, got their home and then started a family.
Nowadays though, many people already have children before they go looking for that family home.
Yes, banks have to take into account that having children is costly but likewise anyone who becomes a parent will also reduce their spending elsewhere such as on social activities.
With a property tax looming and the potential for water charges to follow, there is a real fear that people may be driven away from the market, while those who have already purchased may be pushed closer and closer to breaking point.
We all know there is a serious mortgage arrears issue in Ireland at present and a recent Irish League of Credit Unions finding that over 1.8 million people are left with €100 or less to live on after essential bills are paid is a clear indicator that many more, whether they be homeowners are renters, are dangerously close to the breadline.
The government could do well to heed that warning as they go about putting their proposals together for Budget 2013.
If, as expected, they introduce a property tax of 0.25%, that would mean people would be paying €250 per year per €100,000 borrowed, with that figure only likely to rise in the years to come. Other concerns, such as an increase in fuel costs, must also be taken into account for those forced to commute to work as it is having an increasingly bigger impact on those who either drive or
With that in mind, we’d like to get an idea of your financial situation and try to gauge what potential impact any new taxes would have on your circumstances.
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