Sir, - Your correspondent Eamonn Bennett's letter (August 23rd) shows such a total lack of understanding of the housing market and of basic economic principles that it is difficult to chose where to even start to reply.
To begin with, he tries to compare drink prices to house prices. Brewers can produce never-ending supplies of drink, but the supply of houses is virtually inelastic. Increase in demand for drink does not affect prices of drink, increase in demand for housing must increase prices, this is a basic economic law.
Mr Bennett suggests that all house prices will follow suit if entry level new housing is fixed. The simple outcome of this would be that no new houses would be built. A few moments reflection on what makes up the price of a new house will explain what I mean. No new housing would simply mean that the existing supply would increase even more in price if demand stays at present level.
Emotive and selective statistics showing increases of 60 per cent and over in house prices at a time of low inflation is meaningless. From 1981 to 1988 there was nil per cent increase in house prices at a time when inflation for the period was over 50 per cent - so what?
Mr Bennett quotes Des Geraghty of SIPTU as saying house prices are rigged, and goes on to say leading auctioneers and builders are to blame. If this statement was not so laughable, it would be libellous.
May I suggest that RTE would run a programme explaining the workings of the housing market perhaps over two or three evenings, with studio participation? The subsequent video would be a very useful reference for all people wishing to buy now or in the future, and would be welcomed by all in the estate agency profession. - Yours, etc., DESMOND J. BOYLE,
F.R.I.C.S., F.S.C.S.
Main Street, Dundrum, Dublin 14