No homes to go to
The current housing crisis – with its rising house prices, unaffordable rents and increasing homelessness – affects all Irish people. The key problems are closely linked. But can they be solved?
These should be good times for Naas. Kerry Group is hiring hundreds of workers for its new research plant on the outskirts of the Co Kildare town. A few kilometres down the road, Intel is expanding its already large campus.
But the town has a problem: it doesn’t have enough homes to keep pace with its growing population. A near halt in construction and a competitive rental market mean rents have jumped by between 10 and 20 per cent over the past year.
All of a sudden, it seems, many families on low incomes are being squeezed out of their accommodation, while those on welfare increasingly can’t find a place within rigid rent-supplement limits set by the Government.
The social implications of rising cost and undersupply are shocking and shaming for a country that was awash with extra housing just a few years ago.
More than 5,000 people are on the county’s housing waiting list. Increasing numbers of families who have run out of options are either on the verge of homelessness or staying in hotels or B&Bs as a measure of last resort, according to charities operating in the sphere. In the process, children are being uprooted from schools, families split up and lives disrupted in the most turbulent of ways.
“We’re at the end of our tether here,” says Joanne Martin, a mother of two in the town, who is struggling to keep a roof over her family’s head. “Our rent is due to go up again, but we’ve nothing left to spare . . . We’ve searched everywhere for affordable accommodation.”
Not far away, across the county boundary, Margaret Stapleton is getting used to life in a homeless unit. She’s based there with her three children, who share the same room, after she couldn’t keep up with the price of her rent. “Staff do their best and are good to us, but the conditions we live in are dire,” she says. “I just want to feel safe again and have a home for my children.”
These kinds of stories are increasingly familiar to people like Catherine Murphy, the Independent TD for north Kildare: they tumble into her constituency clinic on a daily basis. “I have people in my office literally panicking because they don’t know where they are going to be living next week with their children,” she says. “One family I met was sleeping in a car. Imagine the kind of problems this is causing for children. This isn’t just a looming crisis; this is a crisis that’s well under way.” ]]]
The story of Naas is by no means exceptional. Many parts of Dublin and its commuter belt are struggling with even more acute problems.
So how did a country that seemed saturated with housing a few years ago come to the point where the Cabinet this week signed off on emergency plans to deal with homelessness? The collapse of the economy and the implosion of the property bubble brought construction to a shuddering halt from 2008 onwards.
Public policies on housing focused on dealing with the blight of ghost estates and mortgage debt rather than planning for future housing needs.
“For a few years it didn’t matter,” says Simon Brooke, director of policy with the housing agency Clúid. “There was an oversupply. But many of those homes were built in the wrong areas. That’s why Leitrim has about 40 years supply of housing but the capital is crying out for homes.”
Towards the end of the boom we were producing anywhere between 80,000 and 100,000 homes at a time when only 15,000 or so a year were needed. Today we’re producing about 7,000 a year at a time when we need at least twice that number.
But it’s more complex than just a lack of new housing. The situation is also complicated by a housing market dominated by a rising number of people who are renting out of necessity, people mired in negative equity who can’t afford to sell, buyers who can’t access credit and reluctant sellers holding out for more price increases.
“There is a shortage of houses for sale, not just a shortage of houses,” says Conor Skehan, chairman of the Housing Agency – the State’s advisory body on housing – and a senior lecturer in the school of spatial planning at Dublin Institute of Technology. “In all likelihood there’s a trolleyload of vacant houses that could be sold – anywhere between 8 and 10 per cent of homes in Dublin – but people don’t have the confidence or aren’t ready to do so.”
The effects of this slowdown in supply have been alarming price increases in the capital for renters and househunters alike. Rents have risen up by about 14 per cent in Dublin over the past year, according to Daft.ie, while residential property prices have risen by 23 per cent as demand continues to exceed supply.
The full social impact of these pressures is only beginning to unfold. Fr Peter McVerry this week predicted a “tsunami of homelessness”, because traditional supports such as social housing and the private rented sector are out of reach for many. “In all the years I have been working with homeless people it has never been so bad,” he said. “We are even, I would say, beyond crisis at this stage.”
But is it also a problem for middle-income earners. Many are struggling to find affordable, good-quality rental accommodation that is convenient for work or family; rent hikes are extracting a relentlessly increasing portion of their income.
For those hoping to buy, pent-up demand for family homes has led to the kind of bidding wars not seen since the heady days of the boom. Young couples or families hoping to buy are beginning to panic as they find themselves increasingly priced out of the market by older cash buyers.
The need for bold action is clear. But what forms should it take? Experts agree that boosting the supply of homes in Dublin and other urban areas is now a major priority. But it’s easier said than done.
The Government now faces a balancing act: it needs to encourage developers to build, ensure finance is available for buyers, and avoid the kinds of conditions that gave rise to the last property bubble. At the the same time it must ensure that the most vulnerable are not left behind and that homelessness doesn’t spiral out of control.
There are differing views about how best to tackle these issues, but there is one point that most people agree on: there will be no quick fix. It will take between 18 months and two years before any meaningful supply comes on stream. In short, this is a problem that could well get worse before it gets better. ]]]
These are not new issues. In fact, most experts agree that cuts in rent supplement and the end of construction of public-sector housing have exacerbated the sense of crisis over recent years.
The Government left it to the final weeks of the local and European election campaign to come up with any coherent answers.
Construction 2020, its plan for a renewed construction sector, was launched by Taoiseach Enda Kenny and Tánaiste Eamon Gilmore last week. It contains laudable aims such as tripling housing output by the end of the decade and adding 60,000 jobs to the construction sector.
But while there were plenty of promises – pledges to undertake reviews, embark on consultation with the industry and set up task forces – the report lacked the kind of concrete action that many hoped for.
“The creation of a boom-bust property market has left hundreds of thousands of families in negative equity, the consequences of which will be with us for many years to come,” the Taoiseach said at the launch. “I promise you there is no going back to that past.”
Yet its most eye-catching proposal – a help-to-buy scheme for first-time buyers – has been criticised by housing experts and economists as a return to exactly the kind of policies that created the property bubble in the first place.
Economists such as Colm McCarthy say it is ominously reminiscent of 100 per cent mortgages. David McWilliams says these kinds of measures will simply result in more money chasing the market upwards and turn south Dublin into “Ireland’s Knightsbridge”. Could we really be sleepwalking into another bubble?
Conor Skehan says that rapidly rising prices do not need to end in a bubble. “We can describe what we’re in as the beginning of the upward curve towards a bubble or as the start of a sustainable plateau. The choices are ours, and it’s still within our grasp to control.”
Part of that involves throwing a “wet blanket of certainty” over the rising sense of panic in the property market. That means showing people that the right kind of housing is on the way in areas where it’s required. He points to large developments such as Cherrywood, in south Dublin, which recently received planning permission. This alone has the capacity for 30,000 people and is served by the Luas. What’s more, it’s specially zoned, which means construction can start soon.
What’s different this time around, Skehan says, is that good-quality data is available to determine actual housing needs, rather than leaving it in the lap of developers.
The Housing Agency produced a detailed report earlier this year that projected that an average of about 15,000 homes will be needed annually over the next four years to meet demand.
Despite the clamour for family homes in the capital, research suggests that more than half of this supply will be needed for one- or two-person households.
In the rush to build, architects and planners are warning that we can’t afford to renege on Government planning policies by carpeting the rest of the city with suburban homes.
“Despite claims from the construction sector of a market preference for houses over apartments, there has been record growth in apartment prices over the last year,” says Paul Keogh, former head of the Royal Institute of Architects of Ireland.
“Even a cursory inspection of the Grand Canal Dock neighbourhood in Dublin suggests today’s thirtysomethings – those who drive the high-tech industries on which our economy now depends – are more than happy to enjoy European lifestyles in well-designed apartments at the levels of density required to support quality public transport, shopping, schools and leisure facilities within walking distance.” ]]]
But many vulnerable low-income families can’t afford to wait for an increase in housing supply that may or may not emerge. Barnardos has warned that the housing crisis is forcing families into homelessness with children growing up in fear, uncertainty and isolation, with the potential for life-long psychological damage.
“We all know how short childhood is,” says Fergus Finlay, the charity’s chief executive. “There are children losing precious time they will never get back in places that make them scared, lonely and stressed. It isn’t good enough, and it needs to stop.”
Warnings by banks that as many as 25,000 mortgage holders face having their homes repossessed or forcibly sold will add further pressure to housing waiting lists and to challenges facing the private rental sector. And analysts expect that the cost of private rental accommodation will continue to rise in Dublin this year, putting particular extra pressure on people who depend on rent supplement.
This week Minister of State for Housing Jan O’Sullivan announced that 2,700 homes will be made available by the end of 2016. They will include buildings from local authorities and from Nama, and the refurbishment of State buildings, along with funds to kick-start the construction of social housing. “I’m convinced that with a co-ordinated approach we can make real progress both in the short and long term,” she says.
But Fr McVerry predicts that the plan is doomed to fail. He says it involves too many State agencies and still relies too much on the private sector. There is, as he puts it, no “low-cost solution” to ending homelessness. Instead, as much as €200 million would need to be spent buying property to adequately address the crisis.
The homeless action-plan measures announced this week are, by and large, quick-fix measures. Many social policy and housing experts agree that we need more ambitious plans to reform the rental market, to provide more certainty to tenants and give more flexibility to people who rely on rent supplement.
Bob Jordan of the housing charity Threshold says the volatility of rents underscores the need for some form of control. “Introducing a system of rent control is the only way for the Government to really address this issue and to ensure rents don’t keep continuously rising beyond affordable limits, especially for rent supplement recipients,” he says.
“To stem the current crisis in a sustainable way, this country must develop a system that allows for reasonable and predictable rent increases and provides stability for both tenants and landlords.”
O’Sullivan says she is examining the potential for rent control, which she floated as a proposal earlier this year. “Under such a scheme, rents would only go up by a certain percentage, based on the consumer price index. This works in other countries, and I want to explore the possibility of that,” she says.
But while it is common across Europe, it is bitterly opposed by landlord groups, which say it will drive away investment from the rental sector.
In addition, O’Sullivan says she is determined to ensure that up to 10 per cent of any new developments are social housing.
Although the current legislation promised much, in practice it delivered less than 4 per cent social housing, as it suited both developers and local authorities to take cash payments instead. “I want to see real housing units, not money,” O’Sullivan says. “It’s vitally important that we get a social dividend.”
For policy experts like Simon Brooke, these kinds of measures have real potential once the market eventually picks up. “The Housing Agency says there’ s a need for 80,000 homes over the coming years, and if 10 per cent of them were social housing, that’s 8,000 homes,” he says. “It would be cost effective and, crucially, provides for mixed tenures. We can’t go back to the old days of monolithic social-housing projects.”
Such a measure is likely to be fiercely resisted by the construction industry, which says the Government should be making it more, not less, affordable for developers to deliver much-needed housing.
It’s a reminder that, in dealing with housing, the issues are rarely simple or straightforward. The precise route forward may still be hazy, but what’s clear is that these are issues that are not going to go away.
Housing is too central to the economy, to our competitiveness and to the lives of our most vulnerable citizens to be left unattended. Fine Gael and Labour have some sharp differences over the next steps, and housing and welfare policies look likely to be key flashpoints between the Coalition parties over the coming months.
Whatever about the local elections, voters won’t forgive a party in power that doesn’t attempt to get to grips with the situation sooner rather than later.