The Government's more interventionist approach to the housing market, with the announcement of a new Affordable Housing Scheme and support for increased residential densities, is a commendable attempt to provide low-cost and convenient accommodation. For years, this Government and, indeed, previous administrations, were content to allow market forces prevail. But the unprecedented level of house-price inflation (the price of houses in Dublin rose by 82 per cent within the last two years) and the negative social impact of this has seen a change of policy. To some degree, both of the initiatives unveiled this week build on the supply-led approach favoured by the Bacon Report last year; the best means of calming the pent-up demand in the housing market is to increase the supply of affordable homes.
To its credit, the Bacon report has done much to dampen speculative activity in the housing market. The days when some 30 per cent of new homes in the outer Dublin suburbs were being purchased by investors appears to have passed. The Bacon report has had other positive effects; huge swathes of land have been rezoned; although it will still be some time before these are serviced and ready for use. For all that, first-time buyers, those on modest incomes and those with ambitions of moving from the rented sector into home ownership, face formidable hurdles. In some areas of Dublin rents have increased by at least 20 per cent in the past year while the cost of the average `first home' - a three-bed semi in the outer suburbs of Dublin - has risen to over £100,000. To compound the agony, the number on the local authority housing lists has increased sharply; in Dublin alone there are over 8,000 families on the waiting list.
Taken together the new initiatives and the so-called `Bacon Two' report, which is due shortly, should form part of a solution to the housing crisis. The Affordable Housing Initiative directed at those earning £20,000 or less (£50,000 or less in the case of double income households) should provide low-cost housing as the houses - whose construction will be arranged by the local authorities - will be sold at cost price and at a favourable interest rate. The question now is whether the scale of the Government's plans are sufficiently ambitious and whether sufficient funds will actually be available to potential house-buyers. The Government apparently plans to build 400 homes under the scheme this year and 2,000 per year within three years. The fact that housing output reached 42,000 last year puts the scheme in context: it may be welcome but it is only part of the solution.
The move to increase housing densities and, indeed, to provide better rail links between Dublin and the outer suburbs are also welcome. Compared to other EU States, this State enjoys low-level density which increases the pressure on house prices and fails to make the best use of land resources, transport and other infrastructure. A move to high-density housing, of a kind common to virtually every other EU State, makes good sense.