THE OXFORD ENGLISH dictionary defines denial as the ‘refusal to acknowledge an unacceptable truth’. It is, in other words, the troubling ability to continue to believe something despite the evidence pointing to the contrary. Sound familiar? Well, it should do, because nobody does denial like Irish policy-makers do denial.
Remember the denials of our political leaders in claiming there was nothing amiss in the property market, right as national house prices were in the process of losing all touch with reality? Remember how, when it was pointed out that Ireland displayed all the hallmarks of a property bubble, they told us there was no cause for concern because the boom times were getting even ‘boomier’(sic).
And when the evidence that a bubble was afoot became incontrovertible, did they start to prepare for the worst? No, they decided that by some stroke of genius the Irish were going to become the first country ever to engineer a ‘soft landing’. Well, we all know what happened next and by no stretch of the English language could it be described as a ‘soft landing’.
Today, six years on from the crash, we find the housing sector is still in crisis and our leaders are still in denial. We have huge numbers of people in mortgage distress, a serious lack of affordable rental accommodation and almost 100,000 people on the waiting list for social housing (and increasing). The problems in the three pillar areas of the housing sector do not stand in isolation; on the contrary they are collapsing in on each other. So let’s take a look.
Built with bricks, fuelled by debt
The mortgage crisis that currently afflicts us is not a peculiarly Irish phenomenon. There is no Irish property-owning gene, we are not historically predisposed to favour home ownership because of the plantations or the Famine or for other such spurious reasons. The crisis is best explained by way of a failed EU wide property model.
The kind of model that predominated here and elsewhere in Europe radically transformed the need for housing as a social necessity into a de facto asset of speculation for banks, brokers and financial institutions. This approach to housing has wreaked havoc not just on our own economy but on that of Spain, Portugal, Latvia, Greece, Hungary, the list goes on. Just like Ireland, each of these countries is suffering from massive debt levels in the owner/occupier sector, just like Ireland they all suffered a property bubble brought about by the widespread privatisation of social housing and subsequent speculation, and just like Ireland they were all encouraged by their respective governments to do so.
As figure.1 illustrates, the numbers of mortgages in arrears has been growing steadily since 2008. Up until now repossessions have been relatively small, however it is now expected that between 25,000 and 30,000 evictions will take place by the end of the year. If these evictions do go ahead, these households will still need somewhere to live, so inevitably they will face two choices:
- Join the ever growing waiting list for social housing, or…
- Try find accommodation in a rental market where prices have increased by 17.6 per cent in the last three years. Talk about a rock and a hard place!
The conditions in the private rental market are not much different for much of the same reason – massive debt. With approximately 40,000 buy-to-let mortgages in arrears nationally, landlords are trying to pass on the high costs of their repayments to their tenants. And because of a lack of regulation for this sector (rent controls, price ceilings, etc) they’ve been able to do just that. This has seen rents increase significantly across the country with the average for Dublin having jumped to €1,210 a month.
Since 2008 the rental market has acted as a kind of pressure release by helping those would-be buyers who are unable to access credit to find accommodation. However the rental market (at least in Dublin) has now soaked up as much pressure as it possibly can and this lack of supply has put a further squeeze on prices.
According to Daft.ie there are currently a mere 1,476 properties available to rent in Dublin whereas there were almost 7,000 this time three years ago. All of this means that people are constantly being driven out of the market as young people still living at home cannot find affordable accommodation, and those already renting finding it increasingly difficult to get by. And whereas once upon a time social housing could act as the safety net for those individuals who could not buy or rent, well… therein lies our next big problem.
Social housing – waiting in vain
There are about 90,000 households in need of social housing made up of about 170,000 individuals who are each facing the prospect of a 15 year wait before being housed. Not a small number, nor a short wait! To put this number in perspective it’s the equivalent of the entire of population of Wexford and Leitrim needing social housing and a new applicant having to wait until 2029. As figure.2 illustrates there has been a massive 60 per cent increase in the numbers needing social housing since 2008 and yet the construction of new stock is at an historic low.
Minister for Housing Jan O’Sullivan – like much of the government – is in denial about the seriousness of the crisis. Her department’s plan to bring about 5,000 new units by the end of the year will barely make a dent in the waiting list. But the real issue is where is all the supposedly ‘new’ stock coming from? For the most part it’s not coming from the construction of new housing units, as the Minister insinuated, because fewer than 200 new units are actually being built.
The bulk of the stock (3,700) will be rented from private landlords by the State. So here we have the bizarre situation in which public money is being used to rent private accommodation from private landlords in order to be used for public ends? A far more practical, cost-effective and long-term strategy would be for the State to engage in the kind of large scale development of housing stock that it has traditionally done, instead of employing a system which uses public monies to support private landlords and in the process creates more costly middlemen for the Exchequer.
What is to be done?
It’s difficult to overstate the scale of the housing crisis this country is facing just as it’s difficult to understate the inadequacy of the government’s response. There is a wealth of practical things which could be done, which should be done, but which unfortunately are not being done. Most of these things are not even on the radar of public consciousness, because more often than not when the proposals don’t suit the prevailing narrative it can be difficult for them to find a platform.
As I hope has been shown, the three most pressing issues within the housing sector are that of debt forgiveness, rent controls and the large scale development of social housing. Yet, so long as we have a government that refuses to face up to the seriousness of the problem, we should expect few remedies. It is difficult to diagnose a problem and assign a treatment when you are denial about the problem’s very existence.
Cillian Doyle is a candidate for People Before Profit in the Ballybrack/Killiney ward in the May elections.
Open thread: How has Ireland’s housing crisis affected you?