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Colm McCarthy: 'Helping people to buy trips up when homes in Dublin are just so expensive'

Colm McCarthy

In large parts of the country younger people on average incomes have given up on home ownership entirely


'Opponents of affordable housing have enjoyed considerable success in Dublin and surrounding counties, as well as in Cork and some other cities.' (stock image)

'Opponents of affordable housing have enjoyed considerable success in Dublin and surrounding counties, as well as in Cork and some other cities.' (stock image)

'Opponents of affordable housing have enjoyed considerable success in Dublin and surrounding counties, as well as in Cork and some other cities.' (stock image)

Affordable housing is not just about rents, it means lower house prices. Every political party believes rents are too high, but all shy away from any ambition to engineer house price reductions. In large parts of the country younger people on average incomes have given up on home ownership, notably in Dublin, its commuter belt and in some of the provincial cities. Prices are just too high to make home ownership a realistic prospect.

The only solution to this consequence of unaffordable housing is to pursue policies likely to cause prices in the problem areas to fall. Some Dublin renters do not want lower rents, they want to quit being renters and buy a place to live, without relinquishing metropolitan citizenship.

House prices in most rural counties are affordable and so are rents: housing affordability is not a nationwide problem. The political parties have thus far offered proposals which fail to acknowledge this reality. All their suggestions are for national policy changes, applicable equally where the problem is critical and where it is minor or non-existent.

According to the most recent Daft report, prices in the northwest and north midlands are less than half the price of comparable properties in the Dublin area and so are rents. In eight rural counties the average house price in December last was under €150,000 - these were Cavan, Donegal, Leitrim, Longford, Mayo, Monaghan, Roscommon and Sligo. A further eight counties had average prices over €150,000 but under €200,000.

Even a single person on average income can contemplate buying a home at these prices, and a couple with two incomes should find a mortgage lender without great difficulty. Wages and salaries do not vary very much across the country - in public employments, they are identical nationwide.

There is no housing affordability problem in large parts of Ireland, and hence no sense to a uniform national policy consisting of help-to-buy incentives. Help-to-buy incentives are not a good idea anyway, but when applied nationwide they help people who do not need help.

Both Fine Gael and Fianna Fail have promised embellishments to the Help to Buy scheme, grants disguised as refunds of income tax paid to first-time buyers of new homes. The maximum price is set at €500,000, the cost of an apartment in parts of Dublin but enough to finance a stylish mansion in several rural counties. Subsidies to buyers cause prices to rise, whether in the form of a dig-out with the deposit or a tax refund.

Rent controls are another bad idea whose time has come. A cap on rents favours sitting tenants, does nothing for those in the queue for accommodation and discourages supply. A government able to reduce rents without adverse consequences should be able to cut the price of coffee or petrol.

The geographical variation in prices points to supply side explanations. The construction costs of new housing do not vary substantially across the country. It is the extravagant cost of zoned land, kept deliberately in short supply by politics rather than geography, which has caused the housing affordability crisis, especially in Dublin. Too little land is zoned and serviced. Even zoned and serviced land in residential areas, already equipped with roads, schools, shops and bus services, cannot be built upon when councillors and TDs use every excuse to oppose the grant of planning permission.

Recent excuses for opposing apartment developments on derelict sites in the inner suburbs of Dublin have included biodiversity, wildlife conservation and excessive height in the case of a four-storey proposal. Hardly a single scheme goes through in Dublin without concerted opposition from residents' associations aided by councillors and TDs of all parties. These opponents of affordable housing have enjoyed considerable success in Dublin and surrounding counties, as well as in Cork and some other cities.

One consequence is a deferred crisis in retirement income provision. The basic State pension in Ireland is enough to live on only if there is no rent to pay, or only a little. For many people, retirement saving consists of paying off the mortgage rather than contributing to a private pension fund.

Take out a mortgage in your thirties, pay off by the time you retire, and live rent-free in your own home on the State pension. For a single person, the state (PRSI) pension delivers just under €1,100 per month. This is less than the average rent on a one-bed apartment in every single postal district of Dublin on the most recent figures, and barely above the figures for Meath, Kildare and Wicklow.

There is no solution to the problem of collapsing home ownership without either the restoration of housing affordability in the private market or the accommodation of a large portion of the retired population of the Dublin area in publicly subsidised housing. In the election debates thus far, pensions and housing have been discussed almost as distinct and unconnected problems. Every denial of planning permission that keeps prices unaffordable helps create more impecunious retired renters down the road. Exclusive focus on public housing provision by local authorities dodges this issue.

RTE last week interviewed people living in Navan, 40km from Dublin, about the burden of daily commuting. Many Navan residents work in Meath, but substantial numbers make the trip to locations around the city. Some suggested a rail service, which would not replicate the car commute unless your job happened to be at the railway station in Dublin and the Navan station happened to be outside your home. Urban sprawl creates car dependence, and excessive sprawl eventually means that there is no feasible public transport solution. Every sprawling city in the world has discovered that foolish land-use policies preclude easy transport options.

Navan is an inner suburb compared to some of the locations to which Dubliners have resorted in the search for affordable housing. Portlaoise is twice the distance, 80km or so, as are towns like Mullingar and Tullamore, from which thousands make the daily journey. The largest city in the world, Tokyo, population 32 million, is about 80km across, east to west, which means that you could fit Tokyo between Portlaoise and Dublin. You would have ample space to do so - the commuters slog their way through, for most of the journey, vast rolling acres of prairie, unavailable for residential development.

One of the schemes offered during the election campaign is a higher levy on undeveloped sites. The incentive to hoard zoned and serviced land derives from the expectation that the political system will ensure that no more of it will ever be created and that the prairies will never be zoned. For any developer inclined to sit it out, there is no more potent incentive than the certainty that all the surrounding land parcels will instantly be zoned and serviced whenever housing gets unaffordable.

Unless zoning and planning policies are reformed the social character of the country will be affected, with those on lower incomes pushed out of the cities, especially Dublin where this trend is already noticeable. The long-distance commuters do not include many people in high-earning jobs and the city is in danger of becoming a reservation for the better-off.

Sunday Independent