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That property stabilisation… January 10, 2013

Posted by WorldbyStorm in Economy.
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…you’d wonder about the reports that things were at last close to turning a corner when you read the following in the SBP from the weekend. It notes that Laing O’Rourke have no intentions of re-entering the Irish property market in terms of construction projects. And LO’R said they’d await ‘an improvement’ before doing so.
But the key sentences are as follows:

There has been widespread debate about the current status of the Irish residential and commercial property market, with the National Asset Management Agency (Nama) stating last Thursday that there were growing indications that both markets were stabilising.
Reports by the property websites Daft.ie and MyHome.ie, both published last week, also pointed to stabilisation in Ireland, particularly in Dublin. However, prices remain down 60 per cent on peak values, and have not shown any signs of significant recovery with prices outside Dublin still falling.

That’s a downbeat, and accurate, assessment, and markedly different in terms of tone to those we’ve seen elsewhere.

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1. LeftAtTheCross - January 10, 2013

From the IT the other day:

“Property prices in Ireland could fall by another 20 per cent before hitting bottom, ratings agency Fitch has warned.”

http://www.irishtimes.com/newspaper/breaking/2013/0108/breaking49.html

Stabilising…fall another 20%…upturn…

Time for the IT to refurbish that crystal ball perhaps.

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WorldbyStorm - January 10, 2013

Nice one LATC. Just reading comments under that piece and I think the consensus is correct that until prices move closer to wages all the stuff about recoveries is do much nonsense. Some are pointing to 1995 prices as closer to reality.

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Rot Peter der Affe - January 10, 2013

Well 3.5 times of before-tax income used to be a measure of reasonable house prices. But that was then before the stable pattern of shrinking real incomes for all but the top 20% became a permanent fixture of capitalism.

So who knows what the ‘real’ price of a house will end up as. What’s important is the the debt-slavers continue to be paid.

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CMK - January 10, 2013

Your last sentence is an interesting way to phrase it. But what happens if the debt slaves , having been paid, then decide not to pay their morgages? Could it be that a mortgage strike has far more potentcy, as a means of compromising the day-to-day operation of capitalism, than the withdrawing of labour?

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LeftAtTheCross - January 10, 2013

There is a mortgage strike of sorts on-going at the moment, with the rate of mortgages in arrears continuing to increase, many people are just not keeping up with their payments, whether by necessity or by choice. It’s not ideological, but is is real.

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CMK - January 10, 2013

Certainly, but I’m talking about a conscious, organised, mortgage strike explicitly links the withholding of mortgage payments with economic demands. I think the INMO discussed a motion to endorse the concept of a mortgage strike at one of there more recent conferencese. I’m not sure where that went. And, returning, briefly, to the idea of a general strike, I think one of the merits of mass industrial action, and this differs markedly from 1913, is that it would break one of the circuits of capital circulation and this would, given the degree to which networks of capital circulation are global, tightly interlinked and acutaly sensitive to anything which even hints at prolonged disruption to the accumulation process, mass withholding of mortgage payments in Ireland would strike terror and would be one area where leverage would rest decisively with workers and not capitalists. That may all be, admittedly, pie in the sky. But I think there may be ‘something to it’ and we having to start thinking creatively if we are to have even the ghost of chance of fighting the capitalists with any effectiveness.

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LeftAtTheCross - January 10, 2013

I take your point. Given the emotional importance (there’s probably a better way of phrasing that, but you know what I mean) of home ownership to many people, how it is bound up with family and life aspiration, I would expect that it would be quite an uphill struggle to convince many people to risk their home and castle, and years of mortgage payments, in a political struggle. It’s one thing to risk a fine over non-payment of household charge, but quite a quantum leap altogether to risk the re-possession of their home. I wouldn’t do it myself.

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CMK - January 10, 2013

Point taken. And to advocate a mortgage strike would require a very clear strategy to show that there would be no ‘come back’. It wouldn’t fly otherwise. But I thought it was interesting that it was even mooted by the INMO as it is a very radical step. Having said that, it may well end up as a ‘nuclear weapon’ that it would, nonetheless, be useful to explore as an option.

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Rot Peter der Affe - January 11, 2013

I used the term debt-slavery advisedly. Unless we in the left can find ways to prevent it, the most likely develepment of capitalism is IMO towards a mix of Chinese/Singaporean authoritarianism and Indian-style debt slavery.

I can thoroughly recommend the novel The White Tiger as a description of the modern form of this form of ultra-exploitation.

Yes, an organised mortgage strike would IMO be far more effective than withdrawal of labour because it aims at an already disfunctional organ in the body of capitalism. But as the other commentators said it needs to be accompanied with:

a) a political demand for a debt jubilee and the repudiation of private banking debts taken on by the state and
b) practical solidarity against eviction.

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Rot Peter der Affe - January 11, 2013

And +1 for your analysis CMK – I concur. I also suspect LATC is right that at the moment it would be difficult to mobilise sufficient solidarity. On a personal level I know my partner would resist not keeping up the payments on our abandoned hovel back home.

But give it a year or two…

But the time is now ripe – as ‘recovery’ keeps being put off to the year after next – to start floating the tactic more generally…

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Rot Peter der Affe - January 11, 2013

I’m sorry I linked the the Wikipedia article The White Tiger without reading it fully (but there’s no going back in time in this blog!) – it is a truly, truly execrable write-up, and utterly misses the nature of the critique of Indian modernity in the book.

I don’t like linking to Amazon so here’s a <a href="http://www.independent.co.uk/arts-entertainment/books/reviews/the-white-tiger-by-aravind-adiga-823472.html"review in the British Independent.

“In the old days there were one thousand castes and destinies in India,” says Balram. “These days there are two castes: Men with Big Bellies, and Men with Small Bellies”

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2. Captain Moonlight - January 10, 2013

The house prices were false all along and the greedy bastards who bought into it got what they deserved…who cares about LOR anyway they shouldn’t be allowed back in the door… Now my neighbour who had land lying doing nowt for 40yrs sold the lot – 70acres for 80,000 an acre – 5.6million – and
left Ireland never to return…smart man he was 92yrs old and a batchelor…he always told me the country was fucked and laid the blame on those who turned their backs on the struggle for national liberation..

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WorldbyStorm - January 11, 2013

I don’t think everyone who bought into it was greedy, though I agree the prices were false all along. I think many people got caught up in it though there was also significant greed. What I would say is that the diminishing focus on social housing throughout the period was an absolute disgrace and part of a simple minded (and self-serving) belief that the market would take care of things. It sure did, but not in the way intended.

BTW I couldn’t care less about LO’R, but I do think that it’s interesting to get an unvarnished and unbiased opinion on the matter given the stuff we hear from the IT et al.

Just in view of what was said above in other comments I’d tend to the view that mid 1990s values might be optimistic.

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FergusD - January 11, 2013

There was a programme on the UK telly box last night about the private rented market. As many cannot get mortgages they rent, and so private rents have shot up. So much so, apparently, that many quite well paid cannot save the deposit for a mortgage, even if they could pay the mortgage itself. One of the many elephants in the room that wasn’t mentioned, in the 15mins I watched, was the dearth of social housing in the UK.

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Rot Peter der Affe - January 11, 2013

And that’s pretty much the way the game is played in Germany as well Fergus – artificial scarcity, growing speculation, rental cartels – many of them owned by American funds – and pretty much no social housing to speak of in the last twenty years.

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ejh - January 11, 2013

I always hated the term “property ladder” – as a sensible man once said to me, it’s not “property” unless you’ve got two. But it should be said that not everybody who bought a house did so for speculative purposes, and many people, even towards the end, were very nervous about the amount of money they were shelling out. But it was either that, or have nowhere to call your own.

I’m very sympathetic to those people. To the people who thought a rising market meant free money – less so.

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eamonncork - January 11, 2013

Plus 1 to ejh. I’d imagine that most people who bought a house at the height of a property boom did so because they wanted to buy a house and had no choice but to pay the going rate. I’d have no sympathy for anyone who bought multiple propertes as investment vehicles but I don’t think there’s anything left-wing about portraying houseowners as being possessed by ‘Greed.’ Full disclosure, I didn’t buy a house.

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CMK - January 11, 2013

Conflating desperation about getting a house, and being forced to take on completely unsustainable financial burdens to do so, with ‘greed’ and ‘irresonsbility’ is one of the very effective and very insidious devices used to de-legitimise the very real suffering of those who did buy their homes between 2002-2007 and who paid well over the odds for very modest homes, in most cases. Homes, indeed, that are often structurally unsound or defective in one or other department. It never ceases to amaze me to see how something that was wildly celebrated in Irish political-economic discourse from 1997-2007, that is the manic acceleration in house prices, is now used as evidence of our collective ‘greed’ for which we must take our due punishment which is a generation of ‘austerity’. Any half sensible, fair minded, observer of the Irish property market in that period knows that those who drove the excesses of the period number in their hundreds and that the victims of that process, victims now being tagged as ‘greedy speculators’, are the focus of media attention while those who drove the process and benefitted from it are largely undiscussed, except for particularly egregious cases like McFeely.

Also, those who bought a second home as an investment towards a pension often did so on the advise of banks and other financial institutions who were the prime beneficiaries of the transaction; not the person who ended up with a second mortgage and the costs of maintaining a second home etc something which we now know is THE key driver for rising mortgage arrears.

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LeftAtTheCross - January 11, 2013

+1

Although I personally don’t agree with the “2nd home as a pension” argument. I know this is a bit of a contentious one within the CAHWT so I’m not trying to stir it up CMK, I’m just expressing a personal misgiving.

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