As bad as it gets?

Following on from tent villages for refugees is now news of international students sleeping rough. Quite something given how much new-build student accommodation blocks have been cropping up in recent years.

Of course one problem is that Dublin new-build apartment blocks are valued based on potential rental yield rather than actual cash-flow. Now guess why they have prices in the region of €4,000 per month and as a result are mostly empty.

Rent controls and now talk of a rent freeze has predictably done what price controls always do in the longer term: Cause shortages due to people exiting the market. This is why a 2% cap has failed to stop the average rent going up over 10%. And of course anyone entering the market is going to front-load a few years of inflation into their initial prices.

Whatever the mechanics the de-facto root cause is a lack of supply at the time of an expanding population. Back in the Enda Kenny days the country was too broke to do anything but for the last 6 years has been deliberately engineering a shortage.

Trouble is the situation has come to the point where it is difficult to come up with yet another sign of the dysfunction that is actually worse than what has already happened. Maybe a shanty town in Phoenix park with people hunting the wild deer with hurling bats, but that is not far off what is already happening.

For all the faults in “letting the market fix the problem” a market is only as good as the environment it operates in, and the Irish government has gone down the path of letting vested interests corrupt this market. This will never be rectified with the current governing parties.

And as a bonus word about this within multi-national companies is now out and people are refusing to relocate to Ireland.

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