Dr John McCartney: Plan to free up housing stock faces a host of social, emotional barriers
Published 09/03/2016 | 02:30
Ideally, there would be a perfect match between household sizes and the size of the properties they occupy. But in Ireland this is often not the case. One-third of one-person households and 44pc of two-person households live in large properties containing six or more rooms.
Economists would argue that this type of mismatch leads to all manner of sub-optimal outcomes. First, it is inflationary. With a fixed stock of properties in the short run, over-consumption of housing resources by some people creates a shortage for others, and this inevitably leads to competitive bidding that drives up prices and rents. But there is also a spatial dimension to the argument. Under-crowding is particularly common in mature urban neighbourhoods developed for family housing in the '50s and '60s.
This has contributed to depopulation of these areas and inefficient use of the public amenities in these locations. It has also forced young people to move further out in search of affordable properties to raise their own families in. This feeds through to urban sprawl and long commutes, which, in turn, puts pressure on the quality of life.
Economists often identify 'empty nesters' as a solution to these problems. The argument goes that, if the empty nesters could be encouraged to trade down from their large, well-located houses, everyone would be a winner. The empty nesters would benefit by unlocking housing equity. They could also benefit by moving into properties that are more suitable for their needs - smaller with less maintenance. Hard-pressed working families would also benefit from a more liquid supply of family homes close to employment.
These arguments are well intentioned but often cause resentment. Understandably, older people do not like being caricatured as bed-blockers. While it's easy for people who are not in that position themselves to recommend that others trade down, older people who are on the spot realise that this is a life-changing decision that involves much more than just financial considerations. Social networks, security, memories, the need to accommodate cherished items of furniture, etc, all play a part.
According to the ESRI's new report, there does appear to be widespread under-utilisation of housing resources within the 50-plus age group. One-third of older people who live alone occupy large properties of six rooms or more. And, of those living with just their spouse, 55pc are in properties of six or more rooms.
The research also seems to suggest older people who move tend to favour smaller properties. Interestingly, however, despite the financial rewards that can be realised by trading down, unlocking equity in pursuit of a better lifestyle does not come through as a strong motivation for older people who move. Separated and divorced seniors are statistically more likely to move, as are the unemployed, non-nationals, people with ill-health and those who have lost a partner. To a greater or lesser degree, all of these groups can be described as vulnerable. Depressingly, therefore, the research suggests to me that many older people who move house are doing so out of necessity rather than by choice.
The report's authors caution that the analysis looked at moves that happened between 2009/2011 and 2012 - clearly not an ideal time for unlocking housing equity. There are also questions about the quality of the trade-down stock now available and how much would meet the requirements of older people voluntarily seeking to unlock equity.
If money is not the primary reason for older households to move, it raises questions about whether any incentives to encourage downsizing or trading-out - such as exemption from stamp duty - would be effective.
Ultimately, inertia, emotional ties, security and the value of social networks appear to be significant barriers to trading down later in life.
■ Dr John McCartney is director of research at Savills