Policy responses to the housing crisis – a road to nowhere?

The cost of accommodation is a major factor in determining the quality of life for the majority of people. The average adult expects to be able to meet certain living costs, primarily accommodation, energy and more recently communication costs. Many young families may also have childcare costs, which in Ireland are substantial.

The cost of accommodation is not included in the calculation of poverty levels but for many, availability and cost of accommodation can result in overcrowding and homelessness driving people into poverty and desolation.

Ireland has a long-standing housing problem arising from:

• The gradual withdrawal of the state from the building of social housing;
• The economic crisis beginning in 2008, including the collapse of the house building sector;
• The commodification of housing flowing from neoliberal policies adopted by the state and the EU.

Supply is a major factor, but not the only one; affordability is an equally obvious factor.

Government has come up with a range of measures to increase supply, including the transfer of public land to private developers, the bypassing of the local planning approval process, and the adoption of measures to encourage international investment in accommodation development, primarily via the Real Estate Investment Trust (REIT). Investment companies have flocked towards this lucrative scheme, building many rent-yielding apartment blocks. Despite all these initiatives housing supply continues to lag behind expectations and cost to the buyer or renter continues to spiral. So, what’s the reason for this? Is supply likely to improve? And will it be affordable?

Government is targeting 33,000 housing units per year under their Housing for All strategy, which at first glance seems substantial, but Lorcan Sirr in a pre-Christmas article in the Irish Times[1], in distinguishing between the different types of housing supply coming onstream, makes the point that not all of this supply is available for those seeking to buy a home. House purchase (usually by taking out a mortgage loan) alongside social housing is the primary means through which security of tenure is secured. One-off housing (24% of supply in 2020) tends not to come on the market, while apartment supply, which is rising sharply (19% of supply in 2020) is almost totally for rental – as previously stated, returns on rental are particularly lucrative for investment companies. The remainder estate or scheme housing (56% of the supply in 2020) almost all comes to the market. Houses for private purchase has declined from being almost half of housing output to a third – a somewhat alarming statistic considering Ireland’s long-standing policy towards home ownership, which guaranteed security into later stages of life, something that rental cannot deliver for a variety of legal and affordability reasons. The situation for young people is even more worrying, with home ownership or mortgage by those 30 and under declining by half over the space of a generation[2].

So much for supply, but housing also needs to be affordable. Unfortunately, lack of supply means that rents continue to rise year on year and affordable housing has become a bit of an oxymoron, being defined at €450,000 in Dublin, well beyond the income of a couple on reasonable wages. How has this come about in such a relatively short (in housing terms) period of time? Many would point to the failure to implement the 1973 Kenny report on land values which left landowners with unrestricted power in determining house prices. Similarly, looking to international investment corporations for a solution has only worsened matters as they exercise their prerogative to get the best return for their shareholders by building apartments, which provide little in the way of long- term security of tenure or affordability.

Clearly, maintaining a situation where people, especially young people, cannot afford accommodation is both unsustainable and potentially destabilising. Short of the state providing massive subsidies to assist people in securing and maintaining a home, something that that is simply unaffordable when posited alongside the pending costs of retrofitting existing housing stock, the only alternative is an immediate reversal of policy and a shift towards a radical intervention by the state. While that may be difficult, maintaining the present policy course, as Sirr points out, is likely to result in a scale of public reaction that no government can withstand.

[1] Irish Times 19/12/2021

[2] Poverty, Income Inequality and Living Standards ESRI 2021

Written by EAPN Ireland board-member Aiden Lloyd