Pat Leahy: Government already looks like it is on the run on housing issue

This was the week that the next and perhaps defining challenge for the Government became clear: the return of the housing crisis. It will stalk the Coalition relentlessly for the remainder of its term.

It is a fool who would declare the pandemic beaten. But Covid-19 will at some stage recede, and if we are lucky, if the vaccine rollout gathers momentum, if no new variants appear in Ireland, if infections remain under control, then it may recede in the next few months. The politics that follow will be dominated by the housing issue.

The housing crisis never went away. It was just masked by Covid. Young people moved back home, inward migration stopped, the homeless numbers fell. But construction also went into deep freeze, cutting off, or at least drastically reducing, the pipeline of new homes. As Goodbodys economist Dermot O’Leary noted, not alone has the level of housing completions dropped off, the number of projects starting has also plummeted. That will affect supply into next year.

It isn’t hard to see what’s going to happen. Younger people will want to move out of their parents’ homes again. People who have used the lockdown to save for a deposit will want to jump into the market. Demand for accommodation both for sale and rent is going to rocket. Already high rents will jump and house prices, already rising, will accelerate. The numbers in homelessness seem sure to rise, probably beyond the 10,000 mark again, and possibly pretty quickly.

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By the autumn, we will be back into a full scale “What is the Government going to do about the housing crisis?” scenario.

Frankly, the Government already looks like it’s on the run. The legislation tabled by Minister for Housing Darragh O’Brien this week was quickly overwhelmed by the controversy over large investment funds gobbling up entire estates of family homes in order to rent them out. The Government scrambled to end the practice while fretting about scaring off the big funds from all Irish property investment. As if they would leave because their feelings were hurt.

The Fianna Fáil parliamentary party wailed that this was all Fine Gael’s fault; Fine Gael demanded that the (Fianna Fáil) Minister for Housing come and explain himself to them. Fianna Fáil’s favourite answer to questions about housing is that it built lots of council houses in the 1950s and 1960s. Fine Gael’s favourite answer is that the construction industry collapsed in the crash under you know who (in public at least it has stopped pointing out whose fault that was, though not in private), omitting to mention that this was 13 years ago. This rhetorical brilliance might have passed muster during the pandemic, but its days are numbered. They’re all going to need better answers.

I think it is hardly possible to overstate the importance that the housing issue will attain, probably quite soon.

A series of conversations with people in Government on the issue suggests a similar analysis is prevalent in the Coalition. A senior Government source, one of the calmer heads around the administration, warns bluntly that it could destroy the Government, such is the inevitability of external pressure and internal discord; another agrees. A Fine Gael Minister says it will make Covid-19 look easy. A Fianna Fáiler says he expects the Coalition to be “blown out of the water” on housing.

Fianna Fáil TD John Lahart told his colleagues on Wednesday that only for Covid-19 people would be out on the streets protesting. And he would be with them. He might not have long to wait for the opportunity.

For many voters, politics is much less ideological than it is transactional. They expect the Government to provide decent public services at a reasonable cost and not to take too much of their money in taxation. They expect a decent standard of life, a safe society, and to have a realistic chance of fulfilling their aspirations for themselves and their children.

Owning your home

And they connect these things to politics. In the last housing boom, few saw a role for the Government to provide public housing, because most people could realistically aspire to own their own home – the banks would lend them (too much, in many cases) the money to buy their own houses. Now they won’t. Houses are out of their reach. And so they expect the State to provide them. That expectation will remain until either the market changes, or the State builds the houses. Neither is likely to happen quickly. Expectation will turn to frustration.

In politics this is manifesting itself as a shift to the left. But in some respects it is just a relocation of people’s desires. Those desires are real and powerful, and they will be a mighty force in politics for the foreseeable future.

This is the landscape then that sees Sinn Féin perfectly positioned to capitalise politically. It has articulate and capable TDs who are at their sharpest on this topic – Eoin Ó Broin and Pearse Doherty especially – and a simple, pungent message: “build more public housing”.

There is an emerging fatalism about all this in Government. One TD tells me they will end up like Churchill in 1945, thrown out by voters after a great victory. It is not, to be honest, the analogy that springs to my mind.

There is another school of thought in Government, though, which both rejects the widespread fatalism but also believes the “Things are getting slowly better” approach won’t cut it. It takes the lesson from the pandemic that quick and muscular action by Government is what gets results, and what is noticed by the public: fortuna fortis favet – fortune favours the bold. It wants to see more radical action – on the basis that the housing crisis is an emergency – and touts tax incentives to funnel private capital into housebuilding. Everybody knows the pitfalls. On the other hand, they also feel like they’re running out of options.