Irish Examiner view: Home prices soaring, conscience, ambition all too absent

Irish house prices jumped by more than 13% in the last year, far, far ahead of any wage inflation. 

When Franklin Delano Roosevelt intensified his life-long campaign to win the White House in 1932, he gathered a Praetorian guard of policy experts to shape the arguments that saw him transform America by being elected president four times.

One was Rexford G Tugwell, who entered Harvard aged 14 and graduated four years later. In the early 1930s, he and Gardner C Means wrote The Modern Corporation and Private Property, a seminal book that dealt with the threat posed by the concentration of economic power. They warned of violent revolution, but revolution did not transpire in America. It did on the other side of the Atlantic — in Germany, with catastrophic consequences for the world.

Roosevelt’s brains trust began the process that enriched America and prevailed until, tragically, its legacy was finally dismantled in time to facilitate the greed-driven bank crash of 2008.

It is not difficult to imagine how Roosevelt or the
millions who supported him would recoil from this week’s confirmation that Irish house prices jumped by more than 13% in the last year, far, far ahead of any wage inflation. 

This represents the highest annual increase in six years and epitomises the concentration of wealth that so unsettled FDR, Tugwell, and Means.

The downturn anticipated for housing due to falling incomes and higher unemployment because of the pandemic has not materialised; rather the opposite. Demand has surged on foot of new remote-working needs and increased savings but supply has been restricted. This adds to existing pressures, pressures sharpened by exceptional building inflation.

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Compared to the challenges faced by FDR — 40% unemployment was routine for his first term — our housing crisis is a modest scandal but a scandal nonetheless. What is more scandalous is the rabbit-in-the-headlights response of one administration after another to a crisis decades in the making, an implosion described by commentator David McWilliams as “the end of a slow-moving housing Ponzi scheme”.

How Roosevelt might have reacted is not too hard to imagine but you can bet the rest of this year’s impossible rent that he would not, as Housing Minister Darragh O’Brien has done, reject the advice from officials that a planned intervention would backfire. 

Department of Housing officials warned that a shared equity scheme would lead to “inflated house prices” and is an “incentive” for developers and “not the purchasers”, according to The Business Post.

Mr O’Brien’s certainty may be misplaced but it is not surprising, as Taoiseach Micheál Martin and Tánaiste Leo Varadkar have disagreed publically about the number of houses that might be delivered in the short- to medium-term days after Mr Varadkar’s 40,000 promise to his party árd fheis.

It is understandable if the advice offered by Tugwell and Means almost a century ago might be, like the 1973 Kenny Report, dismissed as a dusty irrelevance but it is not — or at least the social conscience and ambition that animated their arguments are not. 

Our crisis is no longer about housing or property but rather one of exploitation and, as those long-dead policy wonks warned, that will end only one way.