Rent: the 21st century’s version of bread prices

Minister for Housing Darragh O’Brien may take some comfort in the fact that the housing issues he’s grappling with are not unique to Ireland. Surging prices and rents have made housing inequality a major political faultline across the world.

Instead of closing the increasingly fraught gap between renting and owning, the pandemic has widened it. And governments are increasingly coming under attack for failing to tackle the issue. Rent controls, vacant property taxes, and help-to-buy schemes are being deployed en masse but there seems to be no quick fix in sight.

The leader of Germany’s Ver.di union has called rent the 21st-century equivalent of bread prices, the historic trigger for social unrest. In South Korea, president Moon Jae-in’s party took a drubbing in mayoral elections this year after failing to tackle a 90 per cent rise in the average price of an apartment in Seoul since he took office in May 2017.

In Canada, prime minister Justin Trudeau promised a two-year ban on foreign buyers if re-elected, which he has been.

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The Government here is just one of many getting it in the neck for a housing market that is increasingly delivering the wrong results for young workers and those on low and middle incomes. The average price paid for a home in Dublin in the 12 months to the end of June was €474,080, according to the Central Statistics Office: that is nine times the average full-time salary.

Buyers aren’t just vying with each other to get on the ladder, they’re having to navigate land speculation in the background and the investment patterns of large financial institutions in the foreground.

At the same time, governments are buying up and renting much of the private stock coming on stream to house social tenants, putting them in competition with would-be buyers and renters.

The trend is cementing a wealth divide here and elsewhere, and the politics we’re used to is changing as a result. - Additional reporting by Bloomberg