Wednesday 19 December 2018

Paul Melia: 'IDA should stick to facts and not try to put a shine on housing crisis'

 

Stock Image: Bloomberg
Stock Image: Bloomberg
Paul Melia

Paul Melia

It's not the job of the IDA to tell the story of the Irish housing crisis, but State agencies should at least provide an accurate reflection of what's going on in our highly dysfunctional market.

In an internal report, 'Residential Property Market Key Messages' dated September 2018, the job creation agency makes the eyebrow-raising claim that the monthly rent for a one-person apartment in Dublin, measuring between 39 and 45 square metres, is just over €1,000 a month.

This claim, contained in a table which ranked the cost of renting this property type against those in competitor cities including San Francisco, London, Zurich and Geneva, is based not on Irish data sources such as those held by the Residential Tenancies Board (RTB) or Daft.ie, but instead on a 2017 report from an online search engine catering for people seeking a furnished apartment.

Had the IDA, or anyone acting on its behalf, gone to the RTB website they would have quickly realised that the cost of renting a one-bedroom property of any type in Dublin has not been 'around' €1,000 since the last quarter of 2016.

Currently, it stands at €1,179 per month.

In fact, of the 66 areas of the capital for which data is available, only in seven is the 'average' rent for this property type below €1,000, according to the latest report covering the second quarter of this year. In just 23 of the 66 areas, it's under €1,100.

A quick search of Daft.ie tells the story of how little has changed since - of the 1,479 properties available for rent in all parts of Dublin yesterday afternoon, just 36 were available for €1,000 or less.

While it might be hard to compare rental costs in Dublin with those in other cities, better to just give the facts as they currently stand rather than a meaningless comparison which anyone with even a passing knowledge of the housing market knows doesn't stand up.

In fact, the IDA does this in the same document, saying the 'average' monthly rent in Dublin City currently stands at €1,436. Why it decided to include a meaningless figure on the cost of a one-bed unit is something only it can answer.

There's another issue too. The IDA makes the claim that first-time buyers are spending around 21pc of their income on their mortgages.

This could well reflect repayments under existing Central Bank lending rules for new homeowners, but this figure doesn't reflect the reality for many first-time buyers who bought during the boom. Nor does it take into account that so many people are locked out of the housing market.

Experts have long suggested that many people are spending above 30pc of their income on their housing needs, the upper limit considered sustainable, with the Housing Agency last week confirming that many were paying 40pc or more.

One in three mortgage-holders, it added, reported having had a problem meeting their repayments.

Clearly, for many people, homeownership is a struggle.

Surely the IDA should just have stuck with the facts on pricing and supply, while also alluding to the various measures enacted by the Government to solve the housing crisis, instead of trying to put a shine on a pretty awful situation?

Sources make the point that the agency deals with a sector in a state of flux, it has never denied there is a housing shortage and nor was it attempting to paint an inaccurate picture. Nor has it. But it's fair to say its description of the sector needs to be updated, because right now it's not telling the whole story.

Irish Independent

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