If we’re not careful we’ll be back on the property hamster wheel
That bullish calculation of us needing well over half a million new homes was made by then Fianna Fáil housing minister Noel Ahern and it came at the beginning of 2007. It’s been a long seven years since then for all of us, not least our property market.
That minister is long gone, the political parties in power have changed and the majority of the builders have gone bust. We are in the midst of another property crisis — different but a crisis nonetheless. In May, over three years after they entered office, the Fine Gael/Labour government published a new strategy for a “renewed construction sector” called “Construction 2020”. Coupled with that were a number of other initiatives to try and help people to buy property, to keep people in their homes — whether rented or owned — or to accommodate those who have become newly homeless.
But as we head into a new political season and with a general election not that far away, there is no sense that the property market is going to cause anything but more trouble.
Going back to 2007, in the first two months of that year a whopping 12,800 housing units were completed. The previous year a record 19,470 homes were built in Dublin and almost 30,000 in the greater Dublin area. But the Construction Industry Federation says only a miserly 2,000 homes will be built in the Dublin area in 2014. According to a recent report from the Economic and Social Research Institute, 86% of national housing demand is in the capital and its surrounding commuter counties. We’ve swung from way too many, to way too little and no sign of a coherent plan to solve this latest version of the crisis.
The fact is though that our ability to provide well built properly functioning homes for our citizens in places where they need them, at affordable prices, and with a functioning banking system to allow them to borrow to buy the property, is as poor as it was in 2007.
It is understandable in a human way how no one, politicians included, wanted to mention the possibility of a housing shortage after the scorching we had gotten and the constant reminders with the ghost estates and tales of negative equity. What is not so easily understood is how this situation persisted right up to a point of emergency.
At the moment it doesn’t matter much if you are rich or poor, or whether you want to rent or buy a property. All options are exceptionally difficult. If you need a property in Dublin, or its surrounding areas, or in Cork or Galway — the property “hotspots” you are in big trouble.
There are around 90,000 households waiting for social housing — some waiting for years — rapidly rising rents and home reposessions adding to the prospect of what Fr Peter McVerry has described as a “tsunami of homelessness”.
But the eye has been so off the property ball that it took this sort of serious situation, with families becoming homeless, for it to be realised that local authorities had thousands of empty units which had been boarded up after the last tenants moved out, and these were left to rot because they said they did not have the money to do them up.
Anyone that I know who has more than one property, and worried endlessly during the recession about keeping it occupied, has a far lighter landlord step now knowing prospective tenants are virtually on their knees when it comes to needing somewhere to live. People looking to rent are lucky to get a viewing of a property, let alone a tenancy agreement.
Landlords are helped by the fact that tenants in Ireland face a lack of certainty in relation to their tenancies, and their lot is made worse by the fact they would rather not be renting at all but want to buy, but they either can’t get a mortgage or can’t find a place for sale.
There are other friends who would love to sell up the house which was bought when there were no kids in the family. They want to move to a house more suited to their needs. But they are so knee deep in negative equity (albeit this has improved recently) that they feel it’s a virtually impossible situation.
I’ve watched as the For Sale signs went up around our own Dublin home and within weeks had “Sale Agreed” on them. There was lots of talk of how these people were “cash buyers”. I keep wondering where did this cash come from, and given that it was not all that long ago that people worried the banks were going to go under, where had people been stashing it. But even these cash rich individuals ran into trouble with the supply shortage.
The Government’s document, Construction 2020, contains some good initiatives such as tripling housing output by the end of the decade and adding 60,000 jobs to the construction sector, as well as a controversial help-to-buy scheme for first time buyers. But it still reeks of being a document that majors on construction, rather than an overall housing policy.
It’s foreword does give a good summary of where we’ve come from. “Many factors contributed to the economic catastrophe that hit this country,’ states Construction 2020, which was launched by Taoiseach Enda Kenny and then Tánaiste Eamon Gilmore in the run-up to the European and local elections.
“Many, if not most, of them — lax political management, reckless lending and borrowing, speculative greed, short-term thinking, poor planning and low standards — were features of our boom-time approach to property development and construction.The legacy — lost jobs, unmanageable mortgages, debt overhang, negative equity, houses on flood plains, shoddy and substandard apartments, ghost estates remains all too human and real.
“We are working our way through it, and we will continue to do so. But it is time for a fresh start, one in which the lessons learnt from what went wrong are applied to the creation of a renewed and vibrant construction industry fit for the future.”
Unusually for an official document it speaks plainly about what went wrong and the consequences, but that is explained by the fact that this government continues to blame the last one for the state things are in. That argument only holds so much water, given how pitiful the planning for housing needs has been since Fine Gael and Labour came into Government in early 2011.
The Taoiseach promised at the launch that there was “no going back to the past”. Why don’t I believe him? He has dismissed notions of a property bubble and there is legitimacy to that given the absence of available credit. However it does feel as if we are slipping inexorably backwards — as if the developers are waiting to swing back into action and we will all be back on the property hamster wheel before we know it. The new Environment Minister Alan Kelly and his junior minister Paudie Coffey face a big task.
The Taoiseach promised that there was ‘no going back to the past’. Why don’t I believe him?
