Naive to think reducing garden size would lead to house price drop

Higher-density housing would mean private developers could increase the number of units they can get onto land, which in theory means they could reduce the cost and therefore the price of housing. Would they pass the cost-reduction on to home-buyers? Highly unlikely
Naive to think reducing garden size would lead to house price drop

Reducing garden and street sizes, thus allowing increased density of housing development, without mitigating measures, is highly likely to lead to an increase in house prices in places outside Dublin, like Cork, Waterford, Limerick etc, argues Dr Rory Hearne. Picture:: Gareth Fuller/PA Wire

Would allowing private developers reduce garden and street sizes be a solution to the housing crisis? Would it lead to reduced house prices and boost supply? It is highly unlikely. 

We have been here before. In fact, we are in the housing crisis because, for the last two decades, the Department of Housing and successive governments have essentially made housing policy based on what private developers, and more recently investor funds, have proposed. 

Has it made housing more affordable or provided the right supply of homes? We need to be very cautious about making housing policy based upon proposals from the private development industry.

While there might be some merit to aspects of proposals to shift from apartments to higher-density own-door housing with (smaller) gardens, we need to assess proposals from the private construction industry with proper policy analysis. 

They are not in this business as a charity to provide affordable homes but to maximise profit from housing and land. So let us tread warily. 

We have already seen the disaster when, during the Celtic Tiger, the then Fianna Fáil-led government bent to developer pressure and allowed local authorities opt out of the Part V social housing requirement in housing provision. 

We also have seen the devastating impact on Generation Rent of the Department of Housing and then-minister Eoghan Murphy’s reduced planning guidelines for apartment sizes and standards in 2015 and 2016, in response to developers and institutional investors looking to develop ‘build to rent’ apartments.
We also have seen the devastating impact on Generation Rent of the Department of Housing and then-minister Eoghan Murphy’s reduced planning guidelines for apartment sizes and standards in 2015 and 2016, in response to developers and institutional investors looking to develop ‘build to rent’ apartments.

We also have seen the devastating impact on Generation Rent of the Department of Housing and then-minister Eoghan Murphy’s reduced planning guidelines for apartment sizes and standards in 2015 and 2016, in response to developers and institutional investors looking to develop ‘build to rent’ apartments. 

They argued it would reduce prices and lead to increased supply of ‘boutique’ rental homes. But apartment prices have continued to rise exponentially since then, along with rents. 

The supply did increase, but not as a supply of homes, but instead the build-to-rent apartments have become the dominant supply in the Dublin region. None are available for sale as homes — investor funds are bulk purchasing the majority of them and charging astronomical rents.

Given institutional investors are playing such a large role in the market, I wonder are the proposed changes in reducing garden and street sizes in order to provide a more attractive housing ‘product’ for bulk purchase by investor funds, to then rent these smaller homes out, either to Generation Rent or as leasing to councils, rather than as for sale to home buyers?

We do need to increase the density of housing to create sustainable liveable places, to provide for the ‘15 minute’ city and towns, where shops and services and schools are within walking distance, to reduce the carbon impact of housing development, and reduce car usage. 

Unfortunately the Department of Housing guidelines has required apartments, rather than as housing with gardens. Changes in this regard would be positive to enable high-density own-door housing developments with gardens.

However, the real question to be answered is will changing housing standards lead to reduced house prices and increased supply?

The answer is, not automatically, and not by themselves.

Increased density means higher land prices, and so if land is being sold with higher potential development, it will be more expensive. This will feed into higher house prices. File picture: Larry Cummins
Increased density means higher land prices, and so if land is being sold with higher potential development, it will be more expensive. This will feed into higher house prices. File picture: Larry Cummins

First of all, the market determines the price of housing. Let's assume guidelines for garden and street sizes are reduced. This will mean private developers can increase the number of units they can get onto a set piece of land, which means they can increase their overall income. 

In theory, this means they can reduce the cost, and therefore, price of housing. But in reality what is a private developer going to do? Will they pass on the cost reduction to the home buyers? Do turkeys vote for Christmas? There is no guarantee changes will lead to reduced prices.

In fact, reducing garden and street sizes, thus allowing increased density of housing development, without mitigating measures, is highly likely to lead to an increase in house prices in places outside Dublin, like Cork, Waterford, Limerick etc. 

Increased density means higher land prices, and so if land is being sold with higher potential development, it will be more expensive. This will feed into higher house prices.

Secondly, in terms of increased supply, many factors influence whether private developers decide to build or not. This could be a way for developers with large land banks to increase the value of their land, and thus they can sell it off at higher profit. 

Some developers are pausing on new housing development because of economic uncertainty, with the cost of living and materials inflation. 

There is no guarantee changing house and street size regulations will lead to increased building.

It would be naive to think that just by reducing housing standards it will lead to reduced house prices or even an increase in supply of homes for sale to home buyers.

Ultimately, the only way to guarantee a supply of affordable, decent standard housing, is for the State to be building on a huge scale, through a semi-state construction company, through local councils, and affordable housing providers like Ó Cualann.

  • Dr Rory Hearne is assistant professor of social policy at Maynooth University

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