At the danger of being stoned to death the next time I go into a bar in Mayfair, or getting banned from even more dinner parties in South West London, can I state a few facts, as I see them:

A housing market that rises much in excess of average earnings is bad for economic mobility, social cohesion and acts as a tax by the old on the young.  Trying to explain to my dad this week, admittedly after a couple of pints of Guinness, that the fact that my younger brother cannot buy a decent home for his young family is a direct consequence of my parents sitting on a huge “unearned” gain on their house did not go down nearly as well as the beer had been.

Yes the news that prices are now growing again at 6.00% pa is a bad thing.

Unfortunately, residential capital values bear no relation to rental values, a fact that will strangle at birth the concept of residential REITS far more effectively than governmental lack of interest.  Which is shame as they would solve a number of the above problems.

But our collective mania when it comes to bricks and mortar will be near impossible to shake, the most obvious solution, a capital gains tax on primary residences, would never get any government elected.  So we’ll continue to swing from boom to bust; canny investors will make a packet, poor ones will bring down banks and the man on the Clapham Omnibus will feel fine as long as the value of his primarily, and many cases sole, investment keeps up with the Jones.

And I no longer have to worry about my brother.

I’ve been cut out of the will.

It would appear that Anglo Irish are to start calling in Personal Guarantees (http://www.propertyweek.com/story.asp?sectioncode=297&storycode=3150227&c=1), which given that the majority of their lending was PG backed could lead to some very high profile casualties. 

Already there has been a suggestion that the Modus boys are guilty of no more than not being Irish, but given how deeply unpopular bankers/developers and Nama is in Ireland, I can see far more borrowers being personally pursued; being high profile in Ireland is likely to be more of a hindrance.

When we have discussed enforcement of PG’s with out banking partners, the majority view is that they are only to “keep borrowers honest” and almost no one would consider going after some-one’s house, unless the borrower had bee particularly obstructive or even fraudulent.

Clearly if you have a PG liability, ditch the Bentley, the football club and talk of setting up a phoenix company to buy back your assets assets on the cheap.

The current market is causing a lot of distress to many, many people that Morgan and I know well and the thought of a bank coming after you personally must be pretty grim.  However, these agreements were openly and fairly entered into, even requiring an affidavit from a lawyer to certify that you had been properly advised of the consequences.  I certainly didn’t have the necessary “kahunas” to risk the ansectoral family home in the pursuit of yet another deal and walked away from a large portfolio transaction when Anglo asked fro a PG “at final board”.

Whilst you might have admired swashbuckling investor/developers who chased the dream and lived the high life without a thought to the potential consequences, you shouldn’t feel sorry for them, they knew or ignored the risks. 

There are millions of others who will probably lose far more of their net worth through no fault of their own, graduate surveyors, shop workers and as we go forward even teachers and nurses, as a direct result of the property mania up to 2007 who have probably never even been to Langans.