Coveney faces uphill battle to speed up rate at which things usually happen here

Imagine you crash your car at 10 miles per hour. Now imagine you crash your car at 100 miles per hour. You’re going ten times faster, but the damage to you and your car will be far more than ten times worse. This is an example of effect-asymmetry.

Credit has an effect-asymmetry, and that’s where you get the old saying that if you owe the bank one million, they own you, but if you owe one billion, you own them.

The Central Bank moved last year to put seatbelts on the supply and demand for credit by insisting households have a bit of their savings to invest in a property before they get on the property ladder. A lot of people didn’t like that move, but it was the right move to protect the system.

Not everyone in the system was protected by the Central Bank’s move. People aged between, say, 25 and 35, who were reared on an assumption that after college you get a house and a couch and a lawnmower and one of those stacking things for drink coasters, they have been harmed. The ladder has been pulled up beyond where a lot of them can reach, forcing them to rent for longer than they would have otherwise, creating large changes in rental prices.

Ask yourself the question: is rent dead money? I heard it all my life growing up in a series of rented homes. The idea is that rent is in a sense just consumption of accommodation, while paying a mortgage is both consumption of accommodation and building up equity in an investment. This dual aspect of home ownership is what intrigues Irish people most. Most of the time, you live in a mortgaged home, paying down the mortgage increases your net worth.

Your net worth is the amount of the value of your assets – in this case your house – exceeds the value of your liability – in this case your mortgage.

A few things matter here. First the price of the home at a given moment can change quickly, while the value of the mortgage changes much more slowly, so you can be in negative equity and have negative net worth pretty easily, and hundreds of thousands of homeowners, me included, are in this group.

Second, the price is dependent on people being willing to buy your house, and that needs either cash buyers, rich mummies and daddies, or a nice bank manager. The supply of credit is vital, as are rising prices. You can’t rely on ‘the ladder’ to provide you with a pension, or a nest egg, or anything else. The value of your investment may fall as well as rise.

I took a quick poll on Twitter this week, answered by around 150 people. I asked whether they thought the statement “rent is dead money” was true or false. Sixty per cent said the statement was false. Rent pays someone else’s mortgage, and frees you to change county, country or continent easily, and provides you with a service.

If those between 35 and 55 are the most indebted generation of Irish people to have ever lived, then those between 25 and 35 have had the bad fortune to come to a point in their lives where buying a house is beyond a large number of them without help from an older generation, but for whom the rental sector is not yet developed enough to furnish a solid middle class offering for the majority of them.

Worse: at the lower end of the income distribution, the lack of rental accommodation has forced those with lower incomes out into bed and breakfasts and homelessness. In the first quarter of 2016, almost 4,000 people used homeless accommodation, of whom more than 2,000 were children. This failure is damaging the next generation.

As important as the income distribution is, we know a lot more about it than the distribution of wealth in this country. Two reports, one by the Central Bank and one by Credit Suisse, have attempted to look at how Ireland’s wealth is distributed. The findings are pretty shocking. The adult in the middle of the distribution has a net worth of around €57,000, coming mostly from the value of her property. Irish people put very, very little of their wealth into pensions, or stocks, or bonds, or anything else other than housing. That’s one reason why more than half of Ireland’s workforce have no pension.

The government, personified by the very able Simon Coveney in this case, have to step in to solve the obvious market failure. Coveney has to get started now, and with a scope of tens of billions over the short term.

Home ownership in Ireland is still above 70 per cent. In Germany it’s in the low 40s. If Ireland is to transition towards a rental model over the coming decade, then apartment and house building will have to restart. But property developers, even those sitting on land banks, will not build, because their profit margins are simply too low. Prices need to rise, or regulations need to get reduced, before the developers will get their cut.

This is where the state comes in. It does not need to make a profit, and it does not need to consider its bottom line year to year as developers do, but it needs to move quickly, which the state can never do.

There’s a chance for joined up thinking, and a chance to change the face of the country: new apprenticeships, combined with better planning and a community-based model of urban development.

There’s also the chance to make a complete and utter mess of things. But let’s be optimistic. We can do it.