Wednesday 23 May 2018

In defence of clustering in our cities

Ireland’s housing market is, as we all know, a heavily regulated one. (Stock picture)
Ireland’s housing market is, as we all know, a heavily regulated one. (Stock picture)

The Ronan Lyons Column

It seems in Ireland that we are not too fond of clustering. We are the least urbanised country in Europe - on a par with Portugal - with less than two-thirds of the population living in cities. Elsewhere in the high-income world, typically more than 80pc of the population live in cities.

It is important to remember, though, that this is not because we have a different economic structure. Previously, we might have been less urban because we were a more agricultural society. Now, though, more than 85pc of our jobs are in our main cities.

So we have a huge mismatch between where we work and where we live. This leaves us with some of the longest commutes in Europe. The number of people commuting more than an hour each way on a daily basis went up by more than a third between the 2011 and 2016 Censuses.

You might think this is just because Irish people are different. "We want our patch of land," the argument goes.

Funnily enough, this is also what people in the UK say - even though they are one of the most urbanised countries.

It is unlikely that our poorly placed homes are as a result of our preferences, therefore. And if it's not demand-led, then it must be supply-led. Planning and zoning rules are one of the principal determinants of housing supply. Indeed, the best research shows that, in response to a 10pc increase in demand for housing, as long as land-use regulations do not stop supply from responding, prices need not increase at all.

But Ireland's housing market is, as we all know, a heavily regulated one. Last week, Apple scrapped its plans to build a data centre in Athenry. This news came as a surprise to nobody. In the time it took Apple to open the doors to a data centre in Denmark, and start planning a second one there, it was still facing court challenges here.

Fortunately, it looks as though the Government is finally seeing the harm that land-use regulations can bring. Its Ireland 2040 plan is the first government strategy to acknowledge the cities, and city centres specifically, will have to be the driver of population growth in the future.

Public policy, therefore, is turning - however slowly - in favour of density. But another fight still remains: in favour of clustering. Density is about how many people live in a certain neighbourhood. Clustering means the same kind of activity in a certain neighbourhood.

Don't get me wrong - diversity is important. Jane Jacobs, who wrote one of the bibles of urban economics back in the early 1960s, explained in simple terms how having a mix on the street keeps it safe. But in large cities there is scope for both diversity and clustering.

We know that clustering is a natural human tendency. Just look at the oldest street names in our cities. In Dublin, the old Viking city includes Winetavern Street, Cook Street and Fishamble Street.

Last year, Dublin City Council changed its rules in order to make it harder for student accommodation to cluster in and around higher education institutes. This is as daft as it sounds: by making it harder to build new accommodation for them, they will continue to band together in fours and fives and - with a budget of up to €600 each in central Dublin - easily displace low-income renters.

Instead, the city council - and its peers elsewhere in the country with higher education institutes in or near areas they control - need to think about where its "Student City" will be.

Over the next decade, full-time student numbers are set to rise by roughly one-third. On top of this, the Government has made higher education as an export one of its priorities. This will increase student numbers even further.

All of these students will need somewhere to live. And if we don't have purpose-built student accommodation for them, they will gobble up more and more of the existing stock of dwellings - which are disproportionately family homes.

In addition, purpose-built student accommodation doubles up as tourist accommodation in the summer. So meeting the needs for student housing will also ease the pressure on the short-term lettings market, the so-called Airbnb effect in the rental market.

I'm sure we could all think of potential locations for Dublin's "Student City". An obvious one is Dublin's fruit markets, between Smithfield and Capel Street. This area is close to 17 acres of prime urban land, within walking distance of the Luas, both main train stations, and the DIT and Trinity campuses.

Most of it is currently used as single-floor warehouses for fruit and veg. While those businesses would certainly need to be accommodated - could they use the basements in a new set-up for example? - it is important to keep perspective on the size of prospective benefits as well as the costs.

Ronan Lyons is assistant professor of economics at Trinity College and author of the Daft.ie Reports

Sunday Independent

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