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Towards a Better Approach to Housing Policy

Padraic Kenna, Economist

1st Oct 2012

Dr Padraic Kenna lectures at the School of Law, NUI Galway and is author of Housing Law, Rights and Policy (Dublin, Clarus Press, 2011).

Towards a Better Approach to Housing Policy

This Daft.ie Report shows a different pattern between the housing market in Dublin and the rest of the country. The year-on-year change in asking prices in South County Dublin is just -2% (compared to -20% or more in a couple of counties and -14% on average). Approximately half of all properties are now sold or sale-agreed within three months in the capital (compared to one quarter or one third elsewhere in the country). Indeed, the supply of properties in Dublin has somewhat dried up - the total stock in the capital on 1 August 2012 was lower than at any point since March 2007. Outside the capital city and urban areas the situation is different, and indeed Munster (outside of the cities) has experienced its largest average quarterly fall since Daft.ie records begun.

Economic "Science"

Of course, one of the remarkable things about housing debates today is the prevalence of economic analysis, usually based on charts and graphs (which may be indeed accurate) followed by commentary from housing market apologists. Housing discourse, in the main, in Ireland, is dominated by this economic "science", venerated by the mass media. The use of trends and graphs to explain and predict the future development of the housing system appears almost divine, in the absence of other prophets. All future possibilities are known and predictable. Contemporary economic consensus (even after the comments in the Nyberg Report of the group-think in Ireland) still revolves around a few factors and indicators. This meta-narrative, based on international neo-liberal economics, sets the boundaries of the public and indeed political discourse.

Of course, we know that the number of circumstances where we can make such predictions are quite limited and often based on highly precarious implied but seldom acknowledged assumptions. Clearly, housing markets do not suddenly emerge and operate according to (first year) economic textbook models, tending towards market equilibrium. Indeed, housing market activity in owned and rented housing forms a very small part of the overall operation of the housing system.

Housing on the Other Side

Aside from hallowed predictions of housing market trends, the other side of Irish housing portrayed in the media involves sensational accounts of poor housing, homelessness and the awfulness of life on social housing estates. Many of these areas are truly "undeserved communities" which remain stigmatized, despite regeneration, remedial works, and the symbolic "tenant participation" and social inclusion approaches. Yet, their residents are demonized through derogatory stereotypes, often imported from the UK media. The public gatekeepers and managers of this residualised housing sector receive regular criticism, as if they could transform poor housing for poor people at will. Indeed, in a country which celebrates a Republic of equal citizens it is remarkable that, unlike other European countries, Ireland has no representative organisations of tenants, either social or private.

A New Mindset is Needed

The All-Party Oireachtas Committee on the Constitution - Ninth Progress Report - Private Property (2004) suggested that we needed a new mind-set in Ireland in how we view development land and the notion of property. The value of development land derives largely from the actions of the State in zoning, planning, providing infrastructure, services, etc. Ronan Lyons of Daft.ie has proposed this progressive approach be applied to the new "property" tax. So too, with housing. Housing is planned, funded, built and allocated within a national housing system comprised of interacting State and non-State actors. Ownership and rental markets, in Ireland, are highly supported or buttressed by State subsidies, regulatory intervention and other supports.

The international literature on housing systems, endorsed by the World Bank and IMF, accepts that effective housing systems in contemporary market societies require five key elements:

  • property rights regime - with laws on ownership, exchange of housing and land, etc.
  • housing finance regime - providing affordable and sustainable finance, etc.
  • residential infrastructure regime - of sustainable essential services, etc.
  • regulatory regime - which ensures that all parts of the system are properly regulated, etc.
  • housing subsidies/public housing regime - of adequate and transparent social housing supports, etc.

There is also a need to include the private rented sector, now highly regulated in Ireland, and fast becoming the new social housing.

Towards a Sustainable and Equitable Housing System

To create a sustainable and equitable housing system in Ireland we need to develop a modern approach - a new mindset, focusing on the housing system as a whole, including its interactive components. We also need a "Courageous State" (See Murphy, R, London, Searching Finance, 2011), which is not afraid to act in the public interest to regulate this housing system. A Courageous State is populated by politicians who believe in government which exists for the public good. The Courageous State would eschew deference to simple market approaches, recognizing that housing systems as whole require intervention in many areas. These include law, finance, infrastructure, regulation, consumer protection and subsidized housing.

The "comprehensive" Irish housing plans of the past largely confined themselves to analyzing, promoting and planning social housing. A small group of stakeholders or "partners" took part, whilst outside this process banks borrowed international money and created a devastating housing bubble. Could this or something similar happen again?

In many ways, the planning framework for a sustainable and equitable housing system does not exist at present. Currently, there is little indication of a Courageous State and Courageous Politicians seeking to establish effective governance and regulatory approached to the housing system as a whole, underpinned by recognition of housing rights - limited though these are. Treating all the elements of housing systems in isolation is myopic, and symbolizes a "cowardly State". Effective governance and regulation will require the commitment of banks and banking regulators, legal reformers and the courts service, consumer protection agencies, housing related professional bodies and service providers, infrastructure and other investors, landlords, tenants, as well as advocates for social housing. Indeed, the new proposed mindset for housing in Ireland might borrow some ideas from our international financial supervisors. How about a Regulator for the housing system as a whole, Regulators for housing standards, or Regulators for improved quality of life on housing estates?

HIGHLIGHTS:

Sale Index
Asking Prices, Residential Sales

Stock and flow of properties
Stock and Flow of Sale Properties


SNAPSHOT:

Snapshot of Asking Prices Nationwide
Snapshot of Asking Prices Nationwide