Home truths: Movement on housing, but why so late?
Housing Minister Eoghan Murphy has been a busy bee throughout January. Seldom did a week go by without another initiative landing from our latest minister in charge of solving the housing crisis.
Yesterday marked the commencement of the new low-cost and fixed-rate payment Rebuilding Ireland Loan which was launched only weeks ago. It permits cheap local authority loans up to €320,000 in Dublin and up to €240,000 elsewhere for those who have been twice refused mortgages and who qualify by income (€50,000 or less for one person or €75,000 or less for a couple).
Also last week he launched the Affordable Purchase Scheme, allowing steps to purchase with the State taking an equity share. Also an Affordable Rental Scheme was kicked off on the same day with plans to construct homes to be let at fixed and affordable rates over periods of 25 years. He indicated that more than 17,500 new homes commenced construction in 2017. Meantime junior minister Damien English has just launched the new Enhanced Long-term Social Housing Leasing Scheme, an improved long-term leasing initiative of private dwellings for social housing.
While there must be concerns that the State- wide loan scheme will be inflationary in the absence of high enough supply levels, the numbers of homes underway would seem, at last, to be increasing to levels that might make an impression on the supply famine - even despite recent quibbles over accuracy of that count. So whether we're on the right road or not, we are at least on one and at last seeing a concerted Government attack of action on the housing crisis for the first time since it became apparent in 2012.
But why on earth has it taken six years to get moving? Because today's Governmental hyper activity on housing runs in utter contrast to FG's position just over three years ago - right to the end of 2014 in fact; by which time a supply inflicted housing crisis had clearly been manifesting itself for two years. It was December 1, 2014 when then Taoiseach Enda Kenny stood up and announced: "The answer is houses, houses, houses!" - in response to a Dáil question from Micheál Martin asking what the Government intended doing about record levels of homelessness.
"Houses, houses etc" simply marked the 'eureka' moment, the point at which the Fine Gael leadership was collectively bopped on the head by the last apple from a windfall shower that had been raining down steadily on them for years from this particular tree of the blinking obvious. It was simply the point when certain key people finally accepted that the housing crisis was not a fairy tale told by wily developers. Prior to this we had more than two years of either neutral inaction or blithe dismissal.
But it took until 2016 to launch Rebuilding Ireland - the first comprehensive plan of a suitable scale to deal with it - and almost another two years since for the required impetus of action to be applied. Six years of inactivity by Government in the face of the obvious has cost us all dearly - in unnecessary homelessness, in unattainable city rents, in economically damaging housing costs, in decreased disposable incomes and in familially destructive work commutes.
Looking back to try and make sense of it, we can say that the excruciating sloth of Government in getting into gear can be attributed to three key factors - adverse political ideology, contrarian advisers and perhaps a deliberate degree of cold sacrifice of the wider citizen's welfare in the quest to balance the nation's books.
First the ascendant market driven wing of the Fine Gael party, both young and old, was always ideologically opposed to any large-scale State intervention on social issues like housing. These political players can be accused of adopting a "see no evil, hear no evil" approach to the housing crisis. This brings us to the second - in this regard it suited those politicians best to listen more closely to advisers who were contrarian on the perceived wisdom of a housing crisis existing and to the degree at which it was occurring. Many such advisers were elevated in the wake of the disastrous influence of their pro-developer cheerleading predecessors under Fianna Fáil. Some post crash advisers have also been more aspirational of what they perceive to be a less economically volatile and more sophisticated culture of renting seen in mainland Europe.
Among these advisors has been the ultra controversial Dr Conor Skehan, chairman of the State appointed Housing Agency, who had stated in 2014: "I will never buy a piece of property again - I rent." Dr Skehan, who was recently reappointed to the Housing Agency, has variously provoked controversy by suggesting that homelessness "is normal" and that homeless families are "gaming the system". The former adviser to then Environment Minister Phil Hogan (over housing in this period) has voiced scepticism on global warming - it was reported he blamed the depletions of polar bears in the Arctic on game hunting by American tourists.
Finally we should consider that perhaps this inaction took place during a most peculiar time from which we are now emerging - when the State's biggest property owner has been the State itself. It has been the reluctant custodian, via bank ownerships and Nama, of vast tranches of sub-prime property commitments; a situation which could only benefit greatly from steadily rising house prices. Michael Noonan as Minister for Finance voiced his wish that house prices would continue to rise, because of the State's massive property related encumberments.
Ultimately Ireland Inc needed house price inflation to balance its books. In this way the State's financial vested interests were set up against the housing affordability needs of its citizens. Six years of inactivity suggests that until now, the former interest has always won out.