Tuesday 20 August 2019

Policy makers will answer for housing market

  

(Stock picture)
(Stock picture)
Donal O'Donovan

Donal O'Donovan

There's nothing natural about the housing market. There's a narrative that suggests high rates of home ownership were a reaction to famines and evictions. It's nonsense.

Mass home ownership didn't happen spontaneously. It was policy driven, and powered by a mix of ideology and pragmatism over more than 100 years.

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Policy makers made it easier and financially more compelling to buy a home than it was to rent. They did it with direct and indirect government action targeted for generations at supporting home owners.

There were grants to build, buy and renovate housing, mortgage interest relief, and State underpinning of the mortgage and planning systems.

The system, for decades, effectively subsidised owner-occupied housing as a social and economic good.

The results were positive, but in the wake of the bust the extent the old regime had come to support house prices and builders, rather than buyers, became undeniable and it was rightly picked apart.

Tearing up the old order inevitably created new problems - notably the rent traps that have snared a rapidly growing, and ageing, share of the population.

Homebuyers are no longer privileged by policy. They've been left fighting an increasingly losing battle with big-money investors, who now reap the big benefits of policy initiatives. By accident and design Ireland has brewed up a potent mix of tax breaks, planning rules and Nama and other loans sales that created the perfect conditions for the financialisation of housing.

The era of cuckoo funds didn't happen spontaneously. Policy makers created these conditions and will have to face the implications.

Irish Independent

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