A property bubble, affordable housing and the wealth gap

IF there is an executive, the issue of affordable housing will be a significant issue in any in-tray. The local market continues to buck national trends and first time buyers are now virtually forced out of the market or taking on a higher degree of risk through increased income multiples of mortgages. Capital inflows in particular from the Republic of Ireland appear to be skewing the local market with possibly as many as 50% of all new purchases by investors. However, the construction sector claims that government is adding to woes through slowness to release land pushing up land values, delays in planning preventing new homes getting on to the market quickly and service hook-up costs. Despite economic growth, the wealth gap has widened largely fed by asset growth, in particular property.It is hard to see how such a boom is sustainable, how bad a hit will there be if the bubble bursts? Little can be done about capital inflows. The industry may have a point on land and planning but the hook-up charges argument seems to be an attempt at cutting its costs at the expense of the public purse. Also what guarantees would the sector give that in such a buoyant market that they would pass on savings rather than pocket the increased profits? What is the scope for devolved government action when faced with a distorted market?


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