Economics Assignment 10: Irish Housing Crisis Analysis and Policies

This economics assignment analyzes the housing crisis in Ireland, focusing on quantitative trends, economic theories, and government policies. It examines real-world problems, including the affordability of housing for young people and the impact of inflation. The report explores key economic theories underpinning government intervention in the housing market, such as market failures and externalities. It also investigates income inequality, particularly the Lorenz curve, and the impact of government regulations on the housing market. The assignment highlights issues like the imbalance between housing supply and demand, and the impact of rising house prices on first-time buyers. The report provides a comprehensive overview of the housing crisis, offering insights into the challenges faced by Irish residents and the potential solutions being implemented by the government.

Running head: ECONOMICS ASSIGNMENT
Economics Assignment

2ECONOMICS ASSIGNMENT
Introduction
One of the major topics of economics is the issue of the rising price housing market. Tjis
p[problem is prevalent in large numbers on the Irish regions. In order to carry on with this
assignment the works of Norris and Coates (2010), have been studied. This work will not delve
deep into the layers of each and every socio-economic reasons but will try to deal with the issues
that give rise to the housing problems in Ireland. This assignment will be doing an in-depth
analysis and research of the topics have not been dealt with in the last or the previous
assignment. In other words, this assignment will only be dealing with the topic of Housing crisis
in Ireland and the Irish residents are trying to deal with the same.
In the attempt of dealing with the task of housing price affordability, the main reason that
has come to the highlight is that the large scale issue that is actually faced by the young people.
In particular, the young people are the ones who usually face the problem of getting a good and
suitable house for them in Ireland. However, it has to be noted in this context that the total
amount of the cost or the average cost of living in Ireland is already very high. It is for this
reason that this paper had dealt with the problem in four different aspects. The four different
aspects are as follows-
Section one will provide a detailed explanation of a real Irish world problem using
effective international quantitative trends; section two will focus on the key economic theories
with the underlying principle for government involvement in the stated area of focus; section
three will focus on the key issues; while section four will discuss the key environmental policies.

3ECONOMICS ASSIGNMENT
The Irish government housing schemes
Tax associated tactics The use of stamp duty relief (2000 – 2001)
Interest rates on Mortgage relief (Ended in 2012)
Government Loan method Loans from local authority with home choice
(2009)
Assurance of Mortgages
Joint rights Purchase systems increase
Aid drop down systems Assistance in the purchase (2014 – 2016)
Additional schemes Cheap housing
Affordable building sites
Provision of mortgage allowance
Real world Irish and international quantitative trends in your area
The major things that have been dealt with in this assignment are quantitative trends. The
major problem that is affecting the people living in Ireland is the problem in getting good
housing facilities. Almost all the people of the Irish community have faced this problem. This is
mainly because of the housing expense that is very high and beyond affordability power of many
people. It is also seen that the financial crisis that is going on in Ireland is mainly responsible
for creating the high price of the houses. It is for this reason that the people belonging from the
middle classes in the 19th century would have got it in the price range of £30 to £40 (thousands).
However, there is a chance that this price will sharply rise in the upcoming years. It is seen that
initially there is been a sharp rise of about 536%. Thus, it is essential to find out what ate then the
exact reasons behind the sharp increase. It is seen that the inflation behind the sharp increase can

4ECONOMICS ASSIGNMENT
be one of the major problems. It is also because of the reason that the rate of inflation has rapidly
increased over the past 30 years. It is known as the rate of inflation will be a little more than the
usual if it is a healthy country. However, in the case of Ireland, it is seen that the rate at which
then inflation is increasing is about £39892.
In this modern era, housing prices have risen to a great extent. The housing price has
risen to about 57percent. However, there has also been a kind of rise in the salaries of the people
living in the Irish community (White 2008). However, it is seen that the rate of rising in inflation
is about 100 percent and the rise in the price of housing in Ireland is about 53prcent. However,
there are doubts regarding the fact that if the rise in the salaries of the people has been at par with
the increase in the price of the houses. There isn't attuned inflation since the general employee's
salaries in Ireland was £480 in the 19th century.
However, it is seen that there has not been any sufficient rise in the salaries or the annual
wage rate of the country has not arisen yet. This is because all those people who are employed in
an Irish organization and earns a minimum of £45.
However many of the current citizens of Ireland are of the opinion that many of the
millennial are lazy and do not really want to work (NAKAJIMA and TELYUKOVA, 2017).
. Earlier, it was not that tough for the residents of Ireland who are about 35 years of age
or so to acquire any good house. However now in the modern and the current scenario, it is tough
for the resident to buy the same apartment in Ireland and has not been sufficient increase in their
wages or their salaries.

5ECONOMICS ASSIGNMENT
Key economic theory (i.e.) underpinning the rationale for Government intervention in your
allocated sector
In this, the main rationale is explaining the role played by the Irish government system in
regulating various housing market prices (Ahmadov, 2017). The various kinds of market failure
and the conduction of various processes like the mortgaging of the market properties are also the
same. The national rules and the regulations are set by the Government. The main purpose of the
Irish Government is to make sure that the markets are abiding by all the rules and the regulations
of the Government (O'Leary and Ni Choitir 2016). In order to make sure that the financial crisis
is being sorted out or handled a bit the Government wanted to impose some sorts of checks or
limitations on it. The Government wanted to limit the procedure of the lending and the
borrowing of the market properties, proper handling of the customers and other such matter.
However, it must be noted in this context that the Ireland laws have been set in such a way that
the housing and the mortgaging needs of the customers can be met in a proper way.
The Government of Ireland has been looking after the formulation of the laws and rules
that usually look after the housing price issues. However, there has been a comparative analysis
of the housing policies of Ireland and also the housing policies of the test of the countries. In
order to set the right efforts for the carrying out of the Irish housing scheme, the 8 government
housing schemes have been set up. It has been seen that the other countries are now bringing
about some changes in their housing policies. They are now trying to change the current social
housing schemes to be sole owned housing schemes.

6ECONOMICS ASSIGNMENT
Market failure/ power
In the context of Ireland, it has been seen that the housing markets have shown many
unstable ranges. In other words, they have shown many variations in the piece of the houses and
this has made the housing segment unstable (Norris and Coates 2010). It is seen that the price or
the cost or the houses are not lasting or staying the same for a long time. There has also been a
kind if fall or depreciation in the value of the housings. This has created a negative impact in the
housing market of Ireland.
The individuals who have purchased the houses late are facing a huge problem as there is
a sharp decrease in the valuation of the houses. As there is a fall in the valuation of the housing
process the individuals suffer from the negative impact on their wealth. Likewise, the important
financial institutions transformed into more concerned about loans.
Cause of market failure

7ECONOMICS ASSIGNMENT
This might make the housing project successful for the people who are living in urban
countries. However, big areas and posh communities face problems in enlarging the supply of
houses because of limited land.
Externalities (positive/negative)
Constructing then current kinds of houses can be very beneficial for the people living in the
residents of the neighboring communities. If the houses made are done in a very high-quality
system then the people trying to purchase the houses will be at a greater advantage.
 In the modern times, the houses are being constructed in modern and newly made way.
These houses are heat resistant and are structured in a highly protective manner.
 If the houses are built in a very modern and greatly structured way then there will be a
fall in demand as not many people will be able to purchase them with their limited or
moderate income

8ECONOMICS ASSIGNMENT
However, if the new houses are made then there is a chance that that social wastefulness might
take place. This can take place because people who are already residing in the small
compartmentalized or the ghettos will not be able to make a huge expense or purchase a huge
costly house.

9ECONOMICS ASSIGNMENT
Irish first-time buyer's supply and demand
There has been a sharp increase in the prices of the houses and the interest of lending the
leases. However, on the other hand, the supply has not really been able to match up. The
demands are rapidly increasing. On the other hand, the supply is not being increased at a rapid
rate. This can be one of the major reasons behind this increasing rate of the houses.
Income Inequality in Ireland
The income inequality is growing day by day. This is also reflected in the sharp rise of the
income of the people who are engaged in white color jobs. It is seen that Ireland still has the
highest rate of I equality in the income of the employees. Ireland is actually moving towards the
most huge kind of imbalance existing between the wages that are earned by people involved in
different kinds of employment. The purposes that lie at the back of expanded salary imbalance
in Ireland are enlisted in the following list:
 Unregulated finance and additional finance tools
 Introducing new modern technologies and advanced tool Introduction of the robotic
systems will also help in regulating in the labor cost.

10ECONOMICS ASSIGNMENT
 Scarcity of adequate jobs in the market.
Ireland income Inequality relating to the Lorenz curve
With the nation's equivalent salary dispersion, the closer its Lorenz bend to the 45-degree
line and the lower its Gini list, for instance, the Ireland nation with a record of 25. This model is
mainly talking about the imbalance or the equity that is existing between the income or the wage
that is earned by the residents of Ireland (Fass, Shaff and Zief, 2008).
Irish government regulations
In the year 2015, there was the regulation of many rules and regulations of the Irish
Government. As there was the reformulation and the institutionalization of the rules and
regulations once again the Irish residents found it tough to take any loans (Bardhan, Edelstein
and Kroll 2012). The main motive was to reduce the lending of the household properties and thus
give a boost to the banking sectors.

11ECONOMICS ASSIGNMENT
The LTV can usually meet with the loan that is almost equal to the price of the property at the
suburban that is purchased. It is taken into account in this context that the loan is readily
available. The present cost of the housing and also the income of the individuals. The grants
given for the LTV is lower than those given for the LTI.
A key issue/concern in your allocated sector
In this section, the main basic issues pointed out in the Irish sector are a dis-balance in the
price of houses and property. A special technique or method has been used in order to summarize
the main points of disparities existing in the Irish housing market. As per the opinion of to Li,
Brugha, and Massey (2016), the usage of these methods and the housing market pproach with the
price is linked directly to house rents and its interest rates in Ireland
Key current policy environment and/or potential policy amendments and new
initiatives in the sector
1. It has to be checked that majority of the people are being a part of the enactment policy.
2. People must abide by the environmental agencies in making sure that there are no
negative implications during the building and house marketing process
3. Affordable housing prices are to be set so that the strategies for mitigation can be formed.

12ECONOMICS ASSIGNMENT
Reference
Ahmadov, M. (2017). Prediction of prices in housing market with the correlation-regression
methods. Ukrainian Journal of Ecology, 7(4), pp.399-406.
Alvin, D. (2008). Statement of strategy, 2004-2006 : statistics for a modern Ireland : the efficient
and timely provision of high quality information needed by a changing society =. 4th ed. Dublin:
Central Statistics Office.
Bardhan, A., Edelstein, R. and Kroll, C. (2012). Global housing markets. 2nd ed. Hoboken, NJ:
Wiley.
Casey, R. and Maye-Banbury, A. (2016). Relational and gendered selves: older Irish migrants’
housing and employment histories in the north and East Midlands of England. Housing Studies,
32(5), pp.678-692.
Faraglia, E. (2012). The Impact of Debt Levels and Debt Maturity on Inflation. 3rd ed. London:
Centre for Economic Policy Research.
Fass, P., Shaff, M. and Zief, D. (2008). Real estate investment trusts handbook. 3rd ed. Eagan,
Minn.: Thomson/West.
Frame, W. (2015). Introduction to Special Issue: Government Involvement in Residential
Mortgage Markets. Real Estate Economics, 43(4), pp.807-819.
Gray, D. (2015). Hidden Properties of Irish House Price Vintages. Housing Studies, 30(8),
pp.1317-1353.