Irish Examiner view: Housing problems have not gone away

Ireland starts its new year with stark new figures about the supply and affordability of housing

Despite a plethora of schemes, there is no sign of conditions easing for prospective homebuyers in Ireland this year. Stock picture

As the decorations come down and the new year gets into its stride, we have a reminder today that old problems have not gone away. The latest MyHome.ie/Davy report from the housing market makes for grim reading. Annual house price inflation increased over the last year to just under 10%. 

As of the final quarter of 2021, there is a record low of just 11,300 homes listed for sale nationally on MyHome.ie. And the overall message from the report is that there is little sign of conditions easing for home buyers or renters in the coming year.

In the last year, there have been a number of government initiatives, such as the help-to-buy scheme, and the affordable housing bill, which were designed to make an impact on ballooning prices. 

The results so far suggest that these initiatives are having little impact. Construction activity has increased, and supply is expected to ratchet up accordingly, but the number of units due for completion won’t come anywhere near the demand. And, even with extra supply, the real underlying problem of affordability remains as acute as ever.

Housing Minister Darragh O’Brien is set to launch another plan in the coming weeks to renovate derelict properties. As reported in yesterday’s Irish Examiner, a grant of €30,000 will be made available, and the use of compulsory purchase orders extended. This is a positive development, but all the evidence so far suggests that it may only tinker at the edges.

One initiative that would appear to have had some impact on soaring prices is the imposition by the Central Bank of strict mortgage lending rules. This, according to Davy chief economist Conall Mac Coille, “stopped house prices rising by an additional 10-25% over and above existing levels”.

What has been apparent for some time is that supply alone will not solve the burgeoning problem. In that context, it might be useful to look at the kind of initiatives that are deployed around western Europe to tackle housing problems not dissimilar to ours.

In Berlin, there had been a cap on rental increases in place for decades before Germany’s constitutional court overturned the law in question. That sparked protests and a recent referendum to allow the city forcibly buy properties from big landlords. It remains to be seen whether local government in Berlin will follow through. Such a move may appear radical here, but it is an example of thinking beyond market norms when dealing with an issue like housing.

In yesterday’s Irish Examiner, Joyce Fegan reported that Irish people in a whole array of countries are also experiencing housing issues. In Stockholm, for instance, there is a queueing system for people who want to rent, and there is a tax benefit for the upkeep of homes. 

While some of these kinds of initiatives would not be appropriate for this country, collectively they point to governance that acknowledges housing cannot be left to the market with a bit of tinkering around the edges. 

Some fresh thinking is badly needed as we move into the new year because the same old, same old is quite obviously not working.