Tuesday 16 July 2019

Eilis O'Hanlon: 'Is this the end of the middle class?'

Being unable to buy your own home is a personal disappointment, but also a political time bomb

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Eilis O'Hanlon

All stable societies are built on deferred gratification. You can't have everything you want at once. You have to work hard and wait. But what happens when, despite working hard and waiting patiently, gratification gets pushed so far down the line that it reaches a point where it never happens at all? Ireland may be about to find out.

There are many statistics which, while appearing initially dramatic, turn out on investigation not to be particularly significant. The statement in the Dail last week that Ireland now has the lowest rates of home ownership in half a century was not one of them. A figure of 68pc of people who own their homes - or, more accurately, either own them outright, or are paying mortgages - might not sound too bad, but the graph is definitely on a long-term decline, and Ireland used to have one of Europe's highest rates of home ownership. Now young people have been priced out of the market.

There are people who will argue that Ireland ought to embrace the rental culture which prevails in continental Europe, rather than getting hung up on owning property, but Ireland isn't Switzerland, or Austria. Historically, home ownership has been the bedrock of family life, and there's no compelling reason why that ought to change just because some commentators are drawn towards European-style apartment living rather than older Irish traditions.

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The Taoiseach's response to being reminded about the alarming drop in Irish home ownership was curiously insipid. He declared that the rate of home ownership had actually fallen fastest under the last Fianna Fail government, and that 22,000 new homes had been built in Ireland last year. He then reassured those worried about the problem that price rises were levelling off and that affordability would soon be greater.

In a way, what else could he say? But for a Taoiseach who is supposed to be emotionally literate, his answer missed the point spectacularly.

The ability to buy a home if one is prudent and industrious should be regarded as part of the social contract, not least because the benefits of home ownership go far beyond financial considerations. The link between owning one's own home and happiness or self-esteem has been established repeatedly in studies, and, even if it hadn't been extensively investigated, the psychological effect of the housing crash on those affected would have provided more than enough practical lessons.

'The Taoiseach's response to being reminded about the alarming drop in Irish home ownership was curiously insipid.' Photo: Getty Images
'The Taoiseach's response to being reminded about the alarming drop in Irish home ownership was curiously insipid.' Photo: Getty Images

It's not just about money. Owner-occupiers are more committed to the community. They do more voluntary work. They're also healthier. Home owners move less frequently, so suffer less stress. They can make long-term plans. Children of home owners do better in school, and behave better.

All these benefits assume, of course, that owners can afford to pay the mortgage, which wasn't the case for thousands of people during the recession, and still isn't for many today, recovery or not. But it goes deeper than that. There's a profound psychological need to have one's own space, and the desire for one makes people work and study harder, so that they can get one - all assuming, that is, that home ownership remains an achievable goal.

What if it isn't? That's the dilemma. The UK's Institute for Fiscal Studies found that young people's chance of owning a home in Britain has more than halved in the past 20 years, with those on middle incomes most affected. Thirtysomethings on middle incomes are now no more likely to own their own home than those on much lower wages. In Ireland, the same problems are apparent. House prices have gone up much faster than incomes, and the tightening of lending rules following the crash has pushed property even further out of reach. Young people in surveys increasingly feel that home ownership may be beyond them, though nine out of 10 people asked last year still said they'd prefer to own a home than pay rent. The Taoiseach is proving remarkably tone deaf by not acknowledging the problems that this shift in the social fabric is shoring up.

If young people are offered the chance to buy homes, then they have an automatic and lifelong investment in society, in the system, and most likely their children will, too. If they're locked out of that aspiration, then the risk is that they will feel less allegiance to the society and its values. Put crudely, owning a home makes a person more conservative, and that, despite modern prejudice, is a good thing.

It's not the done thing to admit this any more. Last year, two US professors co-authored an opinion piece which called for a revival of the bourgeois values which helped America flourish in the mid 20th Century, arguing that the "anti-authoritarian, adolescent, wish-fulfillment ideal of sex, drugs, and rock-and-roll" which began taking over in the 1960s "was unworthy of, and unworkable for, a mature, prosperous adult society".

They pointed to the rise in depression and opioid use, high illegitimacy rates, and the current, historically low, male participation in the work force as some of the negative consequences of this shift, calling for a renewal of values including child rearing inside marriage, respect for authority, and self discipline.

Respect for authority is a hard sell these days, since so many institutions have disgraced themselves; but the other conditions ought not to be so difficult to espouse, since the evidence for their efficacy is so readily apparent.

The professors were subsequently embroiled in one of those typically modern media rows, in which they were crassly accused of being racist and sexist for not regarding conventions of the pre-progressive era as unutterably dreadful in all respects.

Thankfully, they refused to back down. Ireland needs some similarly stubborn emissaries for bourgeois values too, starting with home ownership, the one on which all the others naturally converge.

The growth in the Irish middle class in recent years is an enormous achievement, but it risks being squandered if income alone is seen as the be all and end all. Without the realistic expectation of owning property, there is no middle class. Without a middle class, democracy itself starts to look shaky. Populists have been emboldened by Vladimir Putin's declaration that Western liberal democracy is a failed experiment. With only 29pc of Europeans and Americans born in the 1980s reportedly believing that it's essential to live in a democratic system, compared to more than 70pc of those born in the 1930s, there is no more urgent project than winning frustrated millennials back round to boring centrism.

The best start is to ensure that they can buy a house. Doing so creates a win-win situation. Outgoing European Commission president Jean-Claude Juncker once said: "We all know what to do; we just don't know how to get re-elected after we've done it."

This is one instance where doing the right thing would also be electorally rewarding, and if there's one thing Leo Varadkar needs to do to prove himself, it's to win an election.

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