Irish Examiner View: Effective policies urgently needed

We cannot ignore the housing crisis. 

We are not building enough houses to meet demand. File picture: Howard Crowdy

WHILE we continue to be consumed by one, hopefully short or mid-term difficulty, we may be ignoring at our peril a growing long-term crisis within our midst. 

The shortage of affordable homes has not gone away and, judging by a new report, it never will unless drastic steps are taken. An analysis of the home building market here shows that up to 36,000 new homes will be required each year over the next 20 years to meet demand. However, we are currently building less than half of that.

The report, carried out by EY-DKM Economic Advisory Services on behalf of the Irish Home Builders Association (IHBA), focuses on key issues around the cost of building, supply, and affordability.

Entitled Putting Affordability at the Heart of the Housing System it outlines a range of measures that it says could be taken to lower the cost of development, make homes more affordable, and boost supply.

Among the measures suggested to lower the cost of construction and improve supply of new homes is reform of the planning process and increased lending discretion for banks and other financial institutions for those providing loans to first-time buyers.

Annette Hughes, Director of EY-DKM hits the nail on the head by identifying the huge disparity in affordability around the country even though average mortgage repayments are often less than the cost of renting. 

"There is something structurally wrong in a market when rented accommodation costs more per month than a mortgage," she says.

Part of that structural weakness can be assessed by looking at the huge variations in the cost of saving for a house around the country. When it comes to raising the average deposit, the time it takes to save for one ranges from 1.7 years in Kilkenny to over 5 years in Galway city, Wicklow, Waterford City, Cork city, and Dublin city.

In Dublin alone, house and apartment prices have risen by 90% and 80% respectively since 2012 while average salaries have increased by only 18%. The situation in the rest of the country is not much better.

Up to March of this year, housing was Ireland’s biggest economic and social emergency. During the general election campaign, former taoiseach Leo Varadkar said that we needed to build 40,000 houses a year to meet pent-up demand. However, we are nowhere near that figure, despite improvements in recent years.

There may not be any single, simple solution to the housing crisis but there needs to be recognition by all political parties that a workable, national strategy is urgently needed. It is clear that, despite the best intentions, the Government's Rebuilding Ireland strategy is not working. While it sets out a wide range of measures to remedy the housing crisis, it is not radical enough or far-reaching enough.

Homelessness is the clearest evidence of the accommodation shortage in Ireland, but it is not the only one. The desire to own our own homes is as strong as ever in Ireland. We need effective policies to make that a reality.