Bold initiatives required to address nation’s housing crisis

The Housing Agency’s first National Statement highlights the difficulties besetting efforts to house people. But as Rory Hearne points out, few practical solutions are offered.

The Housing Agency’s first National Statement of Housing Supply and Demand provides a much-needed overview of the current housing system in Ireland.

The statement highlights the multiple crises such as the 3,143 people living in emergency accommodation; 89,872 households on the social housing waiting list; and the 104,693 households in mortgage arrears. It also highlights the escalation in private rents and the increasing issues of affordability for those looking to buy a home.

In Dublin, for example, the affordability index for a two-income household with a 30-year mortgage has risen from 18.8% of net income in 2012 to 29.5% this year. At the height of the boom it was 30.5%. But the statement falls short on analysis of the causes of the dysfunction within the Irish housing system and fails to provide innovative solutions to the current crisis.

Disappointingly, it emphasises ‘constraints’ to private developer-oriented housing supply as being at the core of the problem which echoes policies that led to the Celtic Tiger housing crash.

The main finding in the statement is that population growth and change in household size will result in an increased level of household formation in coming years. This means a requirement for the supply of an additional 20,000 residential units per annum up to 2018. However, there is no explanation of the type of tenure required by these new households. Are they looking to purchase a new home, rent privately or are they in need of social housing? Last year the National Economic and Social Council produced an insightful analysis of housing in Ireland where it noted that around one quarter to one third of the population will not find satisfactory housing through the market alone ie they will not be able to afford to purchase their home. This would suggest that a substantial proportion of the ‘supply’ of housing required to meet this growing demand should be non-market, ie low-cost rental or social/local authority housing. An analysis of this type — estimating the type of tenure required within housing demand— would be very useful to have in the Housing Agency’s next national statement due in 2016.

The remit of the Housing Agency is to, among other tasks, provide the Government with advice and research on housing policy. Its vision is “that everyone should be able to live in good quality, affordable homes in sustainable communities.” But in order for this vision to be fulfilled there is a need for a radical change in housing policy and greater political will to ensure the implementation of policies. For example, there is a need to really think about what role Nama, the largest housing development agency in the State, currently plays. But there is no mention of Nama by the agency in its statement. It would have been very useful to have a discussion of Nama’s failure to meet its targets for social housing provision and its role in selling off residential property and land to international vulture speculators which is arguably fuelling the Irish property market.

In the debate on the current housing crisis there is a need for greater acknowledgement of the difficulties arising from an over-reliance on the private sector to meet housing ‘demand’. Private developers and the property industry have a primary aim — to maximise their return on investment. It suits the private property industry to have a housing system where first-time buyers fear there is a scarcity of properties; prices are only going to rise and therefore they should, as during the Celtic Tiger, pay ever-increasing and unaffordable prices to access a home.

It is almost as if we are all sleep-walking through another upward spiral of house and rent prices. But the longer this spiral is allowed continue the deeper the next housing crash will be. Imaginative and innovative State-led intervention could avoid this.

For example, the introduction of rent control in the form of a temporary three-year cap on rent increases and improved security of tenancy (longer leases) in the larger cities and commuter counties around Dublin would ease the spiral and reduce pressure on house purchases. Using vacant properties and derelict sites would also help.

The last census revealed there were 230,000 housing units lying vacant. Ireland also has only 12% of housing stock as social housing. This is in contrast to Britain where it is 17% and the Netherlands which has 33%. This could be changed by investing the additional €1.5bn available in October’s budget in social housing. This would provide an additional 15,000 social housing units — addressing the most acute end of the housing crisis and taking the pressure off the private rental and, therefore, private purchase market.

Another solution would be to take Nama’s rarely used ‘social development’ mandate seriously and to direct it to use some of the €3bn it is planning to spend on office and residential development with vulture funds to provide instead affordable housing. Nama could provide 25,000 housing units in the coming three years in well-planned, sustainable, and mixed communities. It could pioneer a new government housing policy ensuring that both housing demand and need were met. This would be done by delivering developments whereby a third of housing is affordable housing to purchase, a third is private rental at controlled prices and a third is social/public.

The principal beneficiaries of the current housing market system — the property industry, banks, speculators and developers will not be too enthusiastic about such policy changes. But the question must be asked. Does prioritising their interests provide a fair and effective housing system?

Dr Rory Hearne is a lecturer in the Department of Geography, Faculty of Social Sciences, National University of Ireland Maynooth

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