John McManus: Eoghan Murphy has to do more than just get his crazy on

Vulture funds must be convinced that building homes now is the rational course

This is the sort of column that should properly start with a pithy quote from some long dead Chinese general about the importance of knowing your enemy. This is because it is about the vulture funds who currently enjoy the unenviable status of public enemy number one as a result of their hoarding of development land.

These are, of course, the same funds that were welcomed in Ireland with open arms because their purchase of loans from Nama was a vote of confidence in our bankrupt country. But in solving one problem – our national bankruptcy – we without a doubt sowed the seeds of another crisis, this time in the housing market.

The housing crisis is arguably the lesser of two evils. It is in part the price we paid to shift the risk associated with billions in property loans off the taxpayer’s shoulders and on to those of a handful of large international funds. The good news is that if there is another crash and the funds go belly up, it won’t cost us a dime.

The bad news is that they have no intention of going belly up – just the opposite in fact. They are here to make money and will do whatever makes the most money. And somehow or other we have contrived a situation whereby prices are rocketing and they – and also what’s left of our home-grown developers – think they stand to make more money in the long term by slowly trickling out houses. They are not inherently evil. They are just rational.


And rather than rail helplessly against the predictable behaviour of the sort of mobile international capital we invited into Ireland in the first place, the sensible thing to do is change their expectations.

Once they start to believe they will lose money – or miss out on profits – by delaying development, they will start building houses.

What we are talking about here is more than just Minister for Housing Eoghan Murphy getting his full crazy on and threatening to CPO (compulsory purchase order) every bit of vacant land in Dublin – although it might do no harm.

Persuading vulture funds there has been a shift of mindset in Government is no easy task. The funds are all well-plugged into the administration via local partners and armies of lobbyists and advisers who all trade on their knowledge of how Ireland works.


It is inconceivable, they are presumably being told, that an Irish government would consider the sort of radical policies needed to break the logjam in the housing market.

We, after all, are the best little country in the world for doing bailouts. We may have grumbled a bit but we followed the prescription of the troika pretty much to the letter.

As a country we are obsessed about the “signals” our actions send to international markets. It is a shibboleth of public policy that nothing can be done which might damage the attractiveness of Ireland as a location for foreign direct investment. Screwing over vulture funds falls firmly into this category.

Thus, it is not unreasonable for the vulture funds to believe that the status quo will persist, even if it leads to rising homelessness and young people with good jobs unable to afford homes. The one policy measure that proved effective at holding down prices – the Central Bank limits on mortgage lending – was swept aside in the wake of industry pressure with entirely predictable results: higher house prices and no significant increase in supply.

They can be quietly confident that as long as politics is dominated by the two centre parties, Fine Gael and Fianna Fáil, housing policy will be industry-led, incremental and muted. And in truth that is the way the people who have elected these parties over the years seem to want the country run.

Constitutional crusade

It is hard to see a government led by either of these parties embarking on a social housing programme of sufficient scale and ambition that it could scare the vulture funds into speeding up their own plans. Likewise, it does not seem realistic to think that either would embark on a constitutional crusade to modify property rights in order to give itself the tools needed to pressurise landowners to develop housing.

The unknown in all of this, however, is the growing disenchantment with these parties of younger voters, fed in part by the housing crisis and the general feeling that Ireland and its politics does not work very well for them.

If they start to coalesce behind parties that look like they might at least try a radical approach to solving the housing crisis then things might shift quickly.

At the very least it might provoke Fine Gael and Fianna Fáil to look at more dramatic options. At best it might foster some enlightened self-interest among the vultures.