A home at any price: why are the rest of us obsessed with buying?

Ownership TrendsIs Ireland's obsession with property ownership the effect of a history of landlessness - or just thriving neo-liberal economics asks John Holden

AT 77 PER cent Ireland has one of the highest rates of home ownership in Europe, behind Latvia at 79 per cent, Spain at 82 per cent, Hungary at 92 per cent and Lithuania at a staggering 98 per cent. Is our obsession with owning our own plot a post-colonial reaction or the result of an uneven and insecure rental market?

Home ownership is by no means an international preoccupation. Sako Musterd, Professor of Social Geography at the University of Amsterdam, believes the Dutch are also keen on buying homes but that the rental conditions in the Netherlands are so secure under government regulation that many people are content to rent.

"At 55 per cent we have much lower home ownership levels here than in many other countries in the EU," Musterd observes. "Although in very recent times the owner-occupier sector has increased, it was not always this way.

"After the Second World War much of the property sector was in the hands of private investors and standards were very low.

"Since then the situation has changed for the better. The Dutch government now owns a large proportion of dwellings and it does a better job in terms of quality and security, particularly at the bottom end of the market."

In the Netherlands, all rent level increases are regulated. You cannot be evicted or subject to rent increases if, for example, an affordable rent contract is in place and the tenant subsequently begins to earn more money.

"If a person is happy with their location and their conditions, they may never move," says Musterd.

Since 1947, the Dutch private rented sector has gone from 60 per cent of the overall housing stock to 11 per cent.

Dutch housing authorities are obliged to use any profits made in one part of the market to finance losses made elsewhere.

So would there be such a property gold rush in Ireland if the private rental market were more secure?

In 2005 a book entitled Out of Reach: Inequalities in the Irish Housing System claimed that in the private rented sector the difficulties of tenants were "largely overlooked".

Owner-occupiers, developers and landlords are all in receipt of substantial tax benefits whereas private tenants get very little by way of tax relief or legal protection.

Author of the book and co-director of the Centre for Urban and Regional Studies, P J Drudy believes that there are clear winners and losers in the Irish property sector.

"Ireland recorded the highest level of rent increases in the EU from 1997 to 2001. Average rents in Dublin increased by 53 per cent. Similarly, new house prices have increased over four times faster than house building costs.

"There is no great incentive to get into private rental accommodation. The standard is not good enough, particularly at the lower end, and the rents are as high as average mortgage repayments.

"Twenty three thousand units at the lower end would not meet minimum standards. That is 20 per cent of the overall total."

With the Private Residential Tenancies Board now firmly in place, confidence in the private rented sector should improve. However, security of tenure is not the only issue.

President of the Independent Mortgage Advisers' Federation, Michael Dowling sees significant differences between the system here and many of those on the continent.

"In mainland Europe, people will rent rather than buy because you can get a longer lease," says Dowling. "Twelve months is typical here. On the continent it can be anything between three and five years.

"Secondly, many other European cultures are less interested in investing in property. They tend to invest more in business and enterprise.

"Here Irish people have seen the returns on property and so continue to keep the market buoyant."

At present, there is certainly reason to invest in property, with tax reliefs like Sections 23 and 50 in place. However, Drudy does not believe that Section 23 has been a positive dynamic in the property sector.

"There are currently 104,000 investment properties sitting vacant around the country, and these are not holiday homes . . . at the same time, we still have huge waiting lists of people who just want somewhere to live."

The ownership culture could also be connected to a history of oppression, especially when one takes a closer look at levels in the 25 member states at large.

Statistics compiled in 2004 show high levels of ownership in several of the post-communist EU member states.

Slovenia, Latvia and Hungary were all well above Ireland. And, according to European Mortgage Federation figures, Lithuania ranks highest with 98 per cent ownership.

They also had the highest level of mortgage debt per capita out of those studied. This would suggest a post-1989 buying bonanza.

The Plantations, Land Wars and the famine years are certain to have had some impact on every Irishman wanting his own plot.

And even in these days, where land is so financially valuable, there are still many Irish landowners who would prefer to hold onto whatever they have rather than sell it at any price.

PROFESSOR Musterd of the University of Amsterdam believes there is some historical significance to the high level of ownership in some countries. "There are cultural differences. I wouldn't say that it is all related to a history of oppression or landlessness.

"The Turks, for example, also tend to be homeowners, and they take that culture with them when they move to other countries.

"But in Europe, both East and West, we are experiencing a wave of privatisation, a move away from any kind of state intervention. After 1989, getting access to the free world was also getting access to material benefits. Eastern European countries had complete state-led housing markets.

"Now they are the fastest 'privatisers', only because they have been locked in a narrow society for so long."

While neo-liberal economics and history have their part to play, it is worrying that the other major factor affecting Irish motivations to buy is a feeling of insecurity towards renting.

It is also clear that with "cash-cows" like stamp duty on second-hand homes to supplement the Irish exchequer, the Government is unlikely to do anything to upset the market.

As long as Irish people remain obsessed with property ownership in a market which is excluding more and more buyers, a climate of insecurity will prevail.

"Owner occupation is the ideal situation for everyone," says Drudy, "but as the system stands, there are still a lot of people who will never be able to buy a home."