Housing markets around the world have an uncanny knack of never being in equilibrium. Ireland's is no different, but has tended to be even more volatile than the average, especially over the past two decades. If Carlsberg did boom and bust, Ireland's would be…
If the same beer company did data collection, on the other hand, we'd all be hopeful of something better than the Vacant Site Register published by Dublin City Council this week.
The local authority published a register on January 1 that contained no entries, just a page of blank columns and rows. To be fair, other local authorities, including the other Dublin councils, also failed to produce lists of vacant and derelict sites by what had been billed as the January 1 deadline.
Officials say the registers which have now been set up will start to be filled in this year - but these lists have been in the works since 2015 and in the meantime the housing crisis has spiralled further out of control.
Collecting data on derelict sites isn't an academic exercise.
It is now accepted that lack of supply is the major driver of price rises. Focus should, therefore, remain on supply-side measures, including incentivising the appropriate use of land. A positive policy intervention to achieve this goal would be an acceleration in the proposed vacant site levy to complement the Government's efforts. This should be on the New Year's resolution list for Housing Minister Simon Coveney.
But in order to bring forward the tax on empty sites - which is not due to kick in until 2019 - the local authorities need to know where those sites are, whether they are really derelict and who owns them.
The vacant sites tax should be one of those levies that is almost never collected - because just the threat of it should prompt property owners to bring their sites to the market. The sooner the lists are drawn up, the sooner we should see action from owners. The gap is now closing, but 2017 looks set to be another year of imbalance in housing supply and demand. After falling to a low of 8,000 in 2013, new housing completions are expected to grow to 18,000 units this year. However, this is still well short of the 30,000 units that we estimate are needed every year to deal with our growing population, not to mention the pent-up demand that has built up over recent years. The upshot is that prices and rents should rise further in the year ahead.
Government policy, though, is attempting to suspend reality with regard to the rental market by introducing a growth cap of 4pc in Rent Pressure Zones. While one can see the political and social motivations behind such a move, the risk is that the policy acts as a deterrent to investors into the sector. This is not because 4pc is not a satisfactory return in a "zero-rate" world, but because precedents have been set for interference in the rental market, with two in the past 18 months. Indeed, the history of rent control measures internationally suggests that once put in, it is politically very difficult to take them away. If the housing supply shortage is going to be solved in the next few years, Ireland will need the help of large institutional landlords, especially in the main cities. These latest policy measures are hardly a way to lay out the welcome mat.
Up to this latest intervention, Government policy on housing was progressing well under the new Housing Minister. Credit should be given here; Mr Coveney set about feeding the diverse views of the various interest groups into a comprehensive action plan that was published on time over the summer. Focus has been placed upon supply-side initiatives, although the Help-to-Buy scheme was somewhat of a departure from that approach.
With Help-to-Buy kicking in and looser mortgage lending rules being implemented, it is expected that 2017 will be another year of price growth. We are pencilling in 8pc growth for the year ahead.
This represents strong growth, but it is not at the levels that we were seeing in the boom periods of the late 1990s and mid-2000s. Moreover, it cannot be argued that credit and expectations are the major drivers of the growth in house prices this time around. Loan-to-income caps on lending should ensure this remains the case.
Lack of supply is the major driver of price rises. One way to help fix that is by putting down a ministerial marker that sitting on derelict sites in high-demand locations is not acceptable - not in 2019, but right now.
Dermot O'Leary is chief economist with Goodbody