Housing Campaign needed, says Tommy Barker.
Recovery continued its swing back across most sectors of the property market through 2015 and into 2016, at least in terms of deals, sales, values, confidence and all other reference points.
Activity and momentum is back in force in the house market (though supply’s far too scant), hotel sales, bed nights and tourism are all on the rise, offices are finally being built to try to meet FDI demand, and investors once more see Irish property as a good play, after the vulture funds got their first feed at market slump a few years ago.
The evidence over the past month of spending splurge alone is that retail too has found its feet: the planning clearance of Cork’s Capitol cinema site for shopping has impeccable timing, with huge prospects for one end of Patrick Street, and for the city centre in general, where Penneys are due to double their store size, whilst Merchants Quay will update its facade on Patrick Street.
But, one serious black spot remains: the housing crisis isn’t going to go away, you know, and all the electioneering rhetoric in the world isn’t going to find a quick fix for years of stagnation, and for a badly broken funding and construction model. Simply put, it’s going to get worse before it gets better, and there isn’t even a prescription yet that indicates a path to recovery.
A National Campaign is called for, and the 100th anniversary of 1916 might not be a bad time to Build the Nation, Part 2. A Suggestion Box in the GPO by Easter might be a start? Right now, the Rising’s anniversary is personified by ....Rising Rents.
Irish citizens, as well as the fresh blood of workers from overseas and immigrants in our IT, FDI and service sectors are all impatient, waiting on delivery of new houses in the right locations for where employment is coming quickly down the line, with Dublin, Galway and Cork cities most pressingly feeling the pinch. Individual companies, Chambers of Commerce and more all warn of the employment train being derailed if the new arrivals cannot be accommodated.
With so little new stock being built (there have been warnings of housing and skills shortages for years, ignored in the main until the very last minute, and a looming election) plus the Central Bank lending restrictions introduced a year ago now having a fuller impact, the rental sector is getting it in the neck on all sides, with rents rising by an unsustainable (but understandable) 10% in cities, and marginalising the lower paid, and those dependant on rent allowance.
There’s such a gulf between what a Google or Apple employee can expect to rent, and what they can afford, and the prospects of those who simply see no hope of a home of their own, either to buy, to rent or to share; it’s the new divide in Irish society.
Since the slump and crash, as a nation we are less-wedded than before to the notion of home ownership, but the expectation of a roof over one’s head remains a human right.
New home building is at a fraction of what’s needed; the prospects for modular homes were overhyped, and planning and financial constraints mean no quick fixes.
And, critically, more investor/landlords are selling property than are buying it, so rental stock looks like continuing to dwindle.
Being facetious, the only way that accommodation for thousands can be provided overnight, or even in a short term, is if we were to commandeer the cruise ships now plying their seasonal routes way to Cork, Dublin and Waterford ports, do a Somali pirates coup on the craft, fly out the passengers, tie up the ships and accommodate Irish citizens and workers in them.
Sadly and inexcusably, we already berth our citizens and guests in hotels and hostels, and asylum seekers in accommodation centres, barely batting an eyelid at the disruptive cost in human lives, and thwarted childhoods.
Cruise ship accommodation is fanciful, and most likely fictitous, but Ireland’s housing situation is already descending into Farce. One seasoned property watcher has devised( for Irish Examiner readers) the one-act play he dubs ‘The Big House,’ with a suitably flawed list of main and bit players.
Bankers are cast as “ashamed of the past, and frightned of the future.” The Central Bank has “forgotten the past and stopped the future,”, while the Govenment is “the spin-artist supreme”. No surprise there, then.
NAMA? Rather delightfully, NAMA is “the mortician awaiting his own demise.” Supporting actors include The Developer, “represented by a corpse,” The Builder is “hibernating after a long winter,” The Trademan “has gone to Australia, and the Labourer “was last seen in 2008.” And, the Land Owner? “Milking Cows. Again.”
Oh, and The Audience? In the Stalls, be they buyers or renters, waiting, waiting, waiting, for the show to begin. It would be a farce, if it wasn’t already a tragedy.
Seven years after the bust, the construction sector still has to find its feet; access to finance is going to be the key to getting shovels and JCBs on site.
Addressing funding is the key, be it from international investment funds buying into the family multi-let sector, or from the State directly providing finance for major schemes with a social element.
Also needed is a clear, sustainable and equitable financial model that allows developers/investors a return for providing essential housing, and which also gives tenants certainty on rents and tenure. If the word ‘developer’ can’t shake off the negative connotations it acquired in the Celtic Tiger era, then we need a new name (and mindset) for whoever or whatever is going to build the homes we so desperately need.
Banks need to relearn proper diligence, risk assessment and returns on lending for construction. The imbalance between the costs of borrowing from NAMA at about 5%, and costs outside private banking sectors and with equity ‘partners’ at up to 15% is an anomaly and will have to be addressed and resolved.
We shouldn’t have to wait on the European Commission to decide if it constitutes unfair State aid: the irony of some of the complainants having rushed out of Nama only to now object to Nama funding and driving construction with its 20/20/20 vision of 20,000 houses by its wind-up by 2020 isn’t entirely lost either.
* Some 70% of large disposals in 2015 were ’bank-related,’ with ownership of trophy assets now gone overseas — until we buy them back once more. Lower down the scale, auctions gathered pace, selling stock in lots, and the trend will continue in 2016. Over nine auctions, Allsop shifted over €250m worth of Irish property, and competing for a slice of the action are entities like IAMSold, working with 140 partner auctioneers who netted over €30 million in 13 auctions, last year in Dublin, Cork and Galway. Others such as DNG Creedon sold 70 properties in their first year on the auction block, with a motto “Not to leave the money leave the room.” Money is moving.
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