It is hard to not get an uneasy feeling when you look at the Irish property market. Most commentators will argue that what we are seeing is not a bubble, it is a correction. Property prices crashed, now they are recovering.

One of the typical figures that we hear is the comparison between where prices are now, and where they were at the height of the boom. For example, when we hear that Ireland currently has the world's fastest growing property prices - that sounds alarming. When we hear that they are still 39 percent below peak levels - it doesn't seem so bad.

When Ireland's Private Residential Tenancy Board (PRTB) says rent in Dublin is up by just under 10 percent in the last year, that sounds worrying. When you hear that rents for some properties are just 9.4 percent below peak Celtic Tiger prices - that sounds very worrying.

If you change the phrasing of that last statistic - it says that some Dublin rent prices are running at more than 90 percent of boom prices. It's worth bearing in mind that when we refer to peak prices, we are talking about a unique property bubble - a time when plots in Dublin 4 were among the most expensive pieces of land in the world. 

It should also be pointed out that there has been a shift towards renting rather than buying, and that this has happened in the years since the crash - so that change accounts for some portion of the rent increases.

Wages and employment figures on the other hand are nowhere near boom levels. While the economy is growing, incomes have generally failed to rise.

The case for rent control is becoming more persuasive by the day!

— David McWilliams (@davidmcw) December 11, 2014

Rent control, stupid

On the release of the latest figures, economist David McWilliams took to Twitter to post about rent control. This lead to a long thread of responses from other economists, including Trinity college lecturer Constantin Gurdgiev and UCD economist Karl Whelan - the latter suggesting that you should have to "hand in your economist union card if you advocated rent control."

There is an old adage that every problem has an obvious solution - the only problem is that that solution is wrong. Swedish left-wing economist Assar Linbeck once said: "Next to bombing, rent control seems in many cases to be the most efficient technique so far known for destroying a city."

The current government has, on occasion, talked about rent control as a possible solution to some of Ireland's housing issues but speaking today Tánaiste Joan Burton ruled it out.

She said that the Government will continue to try to assist people through rent supplements.

On a basic level, rent control has been shown to decrease investment in property. Studies in the US have found that 29 percent of houses fall into disrepair in rent-controlled housing markets, compared to eight percent in uncontrolled markets.

The PRTB also recently published its report on the issue, and it found that rent controls would not fix the Irish rental market - in fact it could make things worse. 

The study, commissioned by former Minister for Housing and Planning Jan O’Sullivan, reviewed 11 rent control models and found that the policy would have unintended negative consequences for Irish tenants.

Mortgages 

The problems in Irish property are not confined to the rental market. The Irish Central Bank's mortgage requirements would require borrowers to raise 20 percent of the value of a property that they want to buy before being given a mortgage - this plan has been heavily criticised.

The Department of Finance has written to the Central Bank asking them to relax these new regulations. Excessive basic requirements for property buyers could lead them to stay longer in the rental market.

Supply side

Representatives of the construction industry have also expressed fears over the consequences of excessive mortgage regulations - saying that it will stop first-time buyers getting on the property ladder, and that it could stop investors who intend to put money into construction from funding new projects.

One source told the Irish Independent that plans to build 5,000 new homes - almost half of all the planned output for 2015 - could be scrapped if the new rules come in, subsequently keeping rents high.