At a webinar event on housing last month, the chief executive of Cairn Homes, Michael Stanley, produced what he described as a “mind-blowing statistic”. It related to home ownership rates among 25 to 39-year-olds. Stanley noted that the percentage of this age cohort that owned their own homes had dropped from 22 per cent in 2011 to 16 per cent in 2016, according to the official census data, and that based on his company’s own research it was now about 12 per cent. He described the trend as “extraordinary and very worrying”.
It was an interesting fault line for the boss of one of the largest homebuilders in the State to pick up on. Home ownership has collapsed among adults of a prime working age – a reflection of surging house prices and a lost decade of wage growth since the financial crisis. Owning a property has become increasingly concentrated among older age cohorts. In 2016, 85 per cent of 65-year-olds owned their own homes, while just 14 per cent rented.
The trend is cementing a wealth divide here and the politics we’re used to is changing as a result. Fine Gael and Fianna Fáil, the two parties that have dominated politics here since the foundation of the State, received a combined vote of just 43 per cent at the last general election, a record low.
Both were outpolled by Sinn Féin who appealed to voters seemingly left behind by a booming economy and left on the wrong side of the State’s property divide.
The anti-globalisation politics seen in other countries – the reversion to nation-state rhetoric and policies, the anti-immigrant movements – may not have manifested here. But the inequality agenda, “the lack of a stake in society” narrative, which fuels much of it has begun to course through Irish politics and housing is one of the chief inflexion points.
Failure of Rebuilding Ireland strategy
The Government’s Rebuilding Ireland strategy – heralded at the time of its launch in 2016 as a line in the sand in terms of the State’s response to the housing crisis – has failed to change the dynamic and many of the issues it sought to address have worsened.
The strategy – which runs to the end of 2021 – had five central aims; tackling homelessness; increasing supply; delivering 50,000 social housing units; improving conditions in the rental sector; and bringing some of the State’s 90,0000 vacant homes back into circulation.
At the outset of the programme, there were 6,906 individuals classified as homeless in the State. In February this year there were 8,238 – this was down from over 10,000 prior to the pandemic.
On supply, the plan promised to deliver 25,000 new homes a year, which equates to 150,000 over the six-year lifespan of the programme. The actual out-turn – with one year to go – is 83,913. It’s something of a nonsense for government to make promises around private sector housing output, which it has no direct control over, but the main parties seem intent on signing up to these pledges.
The strategy might have delivered on its social housing target but for the pandemic and the current lockdown. It promised 51,076 additional units and has – with one year to go – delivered 39,065. Critics point out that a significant portion of these are turnkey acquisitions (social housing units bought directly from private developers) and therefore not delivered directly, which, they say, removes supply from the private market.
Developers, in many cases, say they wouldn’t have secured the requisite financing and the homes wouldn’t have been built without pre-sale commitments from local authorities.
Perhaps more controversially, the Government includes under the category of “social housing solutions” its two main rent support schemes: the Housing Assistance Payment (HAP) and the Rental Accommodation Scheme (RAS).
This shift from bricks to benefits has been one of most eye-catching features of Government housing policy. Spending on rent subsidies has doubled since 2016 and will be close to €1 billion this year.
Rentals and vacant homes
On the rental side, inflation may have eased but rents in urban areas remain high by international standards – just under €2,000 per month on average in Dublin. There is also a Covid component to the recent pick-up in rental supply. Landlords have withdrawn their rentals from short-term listing sites such as Airbnb as a result of the restrictions around travel, bolstering supply on traditional platforms like Daft.ie. This, however, may be shortlived.
And finally on vacant homes – seen by many as the low-hanging fruit in the equation – the Government gave it itself a modest target of retrieving 6,500 units via three schemes, so far they have delivered less than 1,400.
The dogma that increasing supply will unlock so many of these issues is becoming increasingly jaded in the face of overwhelmingly evidence to the contrary. Not once in our recent history has it improved affordability. And it’s this constant erosion of affordability that lies at the heart of the problem. It’s tantamount to a social engineering of sorts with the cities filleted of young working families and communities broken down by income groups.
By noting the fall-off in home ownership, Michael Stanley may have been thinking ahead to what sort of customer base the firm will have if this polarising trend continues. Government might also wonder what sort of voter base it will have.