Housing: time to tackle national crisis

Any attempt to represent current housing difficulties as “a new normal” should be resisted. The housing market is dysfunctional on a number of levels. Shortages in social housing exacerbate the situation and, along with a growing incidence of homelessness, contribute to what has become a perfect storm.

Taoiseach Leo Varadkar was unwise, on a number of counts, to publicly declare that Ireland's rate of homelessness was not high by international standards. The remarks lacked a sense of urgency at a time when homelessness had reached unprecedented levels and further tax cuts were being promised. His comments were based on out-of-date statistics and limited definitions. Quite properly, a representative of the Simon Community called him out.

The housing crisis may not be of Fine Gael’s making – the building and banking sectors imploded on Fianna Fáil’s watch – but the Government’s efforts to repair the situation, through delay and undue reliance on the private sector, have not impressed. Conflicting pressures were at work: a shortage of supply has pushed up prices and lifted tens of thousands of private homes out of negative equity, to the benefit of both owners and bank lenders, but rents rose and homelessness increased. Now that prices have regained pre-crash levels, however, particular attention should be paid to land costs, higher-density developments, funding and direct-build social housing.

For families that have seen prices and rents fall and rise by up to 50 per cent in the past decade, there is nothing 'normal' about the present situation

An ESRI report found no evidence of a credit bubble in the housing market. However this will be no consolation to young would-be buyers, especially as further price increases are anticipated. Growth in rents is also expected. Perhaps it is inevitable that Ireland will follow Europe in terms of home rentals, rather than home ownership. Fifty-one per cent of Germans own their homes, compared to 68 per cent here. This underlines the need for a more developed rental market, with a big increase needed in the number of available properties.

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For families that have seen prices and rents fall and rise by up to 50 per cent in the past decade, there is nothing “normal” about the present situation. Average prices in Dublin are excessive. Site costs underpin prices but, invariably, local residents oppose the construction of apartment blocks. Similarly, building finance is directed towards single dwellings, rather than apartments. At a time when an additional 4,000 offices are being constructed in Dublin, nobody seems to know where the workers will live.

Muddling through is no longer an option. Greater housing density is required. Unlike the higgledy-piggledy construction of the boom years, when builders dictated the agenda, transport systems and services must be provided with new homes as part of this.