Sir, - There is still a lot of warranted discussion about interest rates, the cost of land, demand and supply: all in relation to the present cost of housing. However, there is one intangible element that seems to have been overlooked - perception. In Ireland now there is a perception that it does not matter how much you pay for a house, as it is an investment and there will be a healthy return over the period of ownership. You don't have to travel far without someone talking about how many thousands they have made in the last number of weeks/months/ years . . . etc. This perception has become a dangerous one as it has all but turned into a bullish assumption. Many simply don't see a drop in property prices - ever. In the late 1980s in Britain when interest rates rose, some got into trouble, had to sell and the supply of houses rose - this resulted in a downward pressure on prices. The demand for houses was still there but the potential buyers' perception was now one of a projected loss instead of the assumed gain up to that point. This led to buyers holding off and the demand then dropped away. This is where we may see a similar situation to Britain here. If people see a potential loss there will be a huge back-off in demand. It is a bit like someone going down a water slide into a swimming pool they cannot see. They assume there is plenty of water in the pool, but if seeds of doubt are planted they perceive that there might not be. Beware of the empty pool!
Leonard Keogh Co Wicklow
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