It was around 2004, I think, that the murmurings first started. Every now and then, on a radio show, or a television programme starved for content in the dog days of summer, some bright spark would suggest that perhaps a good topic would be the question of whether the Irish were too attached to home ownership. That’s not the way on the continent, you see. In France, some people rent for their whole lives. In Berlin, four or five companies own almost all the housing. Renting was very European, and “very European” is, of course, an Irish media synonym for “very good”. Perhaps we should own less, and rent more.
In Ireland, if the establishment has a critical weakness, it is this: All it really takes for an idea to become mainstream amongst them overnight is two things – that the idea should sound vaguely progressive and modern, and that it should be articulated on the right programmes (Morning Ireland and Prime Time) by the right sort of academics or “international experts”.
“More renting is good” was one such idea, and it swiftly became the kind of thing that an up and coming politician could say on the radio in the confidence that they would receive a thoughtful head-nod from the presenter and not be criticised for it by their fellow panelists. And so, in a very short time, it became internalised, almost by osmosis, as national policy. And a fine national policy it was, because it allowed our leaders to ignore falling home ownership and write it off as cultural advancement: We are becoming more European, people’s priorities are changing, and so on. Our leaders do love a policy that allows them to appear “with it” by doing precisely nothing.
Renting, we were told, offered all sorts of desirable things: Flexibility, for one. In a global world, the idea of “tying young people down” to a lifetime of mortgage payments seemed outdated. In the heady days at the start of the millennium, the idea was that we’d all flit around the globe like swallows, spending part of our lives in Ireland, but enjoying the freedom to live for years in Sydney, or Paris, or Tokyo. Seeing renting as a form of “dead money” was outdated, you see: Better that we all see it as the cheap and cheerful cost of the newfound freedoms bestowed on us by globalisation. No more being tied down; instead, we would all be free, like the birds.
And so, a decade and a bit later, here we are. The ESRI reports that the share of young Irish people who own their homes has fallen by more than half, from 60% to 27%. Rental costs are through the roof, with the DAFT monitor reporting a record rise, yesterday.
Some of this, of course, is due to factors beyond the reasonable control of Government: The economic crisis of 2008 flattened a generation of would-be buyers. The recent surge in demand for properties to accommodate Ukrainian refugees is something reasonable people can disagree on, but it’s hard to blame the Government for trying to help people in trouble. And besides, that problem should – in theory – be time limited.
But much of this problem – most of it, in fact – is the consequences of catastrophic policy failure. It is a failure of planning, for example: In Dublin, if matters were left purely to the free market, it is likely that the city would by now be strewn with skyscrapers and other high-rise buildings, making much more efficient use of our available space, and construction resources, just like in every other modern capital. But a desire to keep Dublin as it is, unchanged, basically, since independence, means that there has been ever more urban sprawl, which drives up demand for land. When the demand for land rises, the price of land rises, and so does the price of housing. That is why we have the phenomenon of half million three beds in places like Athy and Moate – fine towns both, but, we’d hopefully agree, overpriced.
It is a failure of regulation, too: We do not talk, as much as we should, about the Irish Central Bank’s draconian restrictions on mortgage lending, introduced at the back end of the bust, to ensure that nothing like the bust could ever happen again. Single people on average incomes are now effectively banned from getting a mortgage. This is all being done in the name of protecting the stability of the banking sector – but really, this should be a secondary aim of public policy. Ireland has a policy designed to hedge against a once in a century economic catastrophe that’s already happened, this century.
It’s a failure of basic maths: We have consistently imported more people than we have homes for. That is neither a pro immigration statement, nor an anti-immigration one: Immigration would have no effect on house prices, had we enough homes to satisfy the demand for them. But we do not have enough homes, and at the same time as we are failing to build new ones, we are adding more and more people who need them. At the same time, to mention “immigration” and “housing” in the same sentence earns you – at best – an uncomfortable and pointed silence from many people who worry that they might be indulging in dangerous thinking.
There are many more failures: Failures of policy, like the sustained assault on landlords which has led so many of them to flee the market, failures of critical thinking, like the disastrous introduction of rent caps. Failures of education, in a country which has basically decided to stop producing construction workers.
Most of all, though, what Ireland suffers from is a failure of understanding. The Irish Times yesterday led with this, fairly astonishing, statement:
The Central Bank of Ireland’s latest quarterly accounts, detailing the fact that the net wealth of Irish households now eclipses €1 trillion, tell us two incontrovertible facts about the world in which we live. First, household wealth is increasingly a function of real estate assets rather than earnings. Second, property is now the chief dividing line between rich and poor.
Here’s a simple truth: Property has always been the dividing line between rich and poor. Assets have always been more important than income because assets gain value with inflation, while income loses value with inflation. That is why your parents, who bought their house for 45,000 in 1986, with a much lower income than you have today, are now sitting in a property worth nearly a million, while you are looking at renting a bedroom in Drimnagh. When Irish policymakers started buying into the idea that maybe renting was good, they bought into a pernicious lie.
For years, our policymakers have bought into this “Swallow” theory: That increased renting was good; that falling home ownership was good; that all of this was, really, nothing to worry about. As the pot was being boiled, our elected frogs sat in it comfortably, telling anybody who would listen that actually, more renting was a net positive.
It never was.
The problem, now, will take years to fix. We have lost a generation to it: Tens of thousands of disillusioned young Irish people who do not have homes, and likely never will. By the time the problem is fixed, after all, a new generation will be pushing up behind them, bidding against them. Able to get bigger mortgages, for longer, because, well, they’re 25, and the lost generation is in its late 30’s or 40’s and not best suited to a 30 year mortgage.
Perhaps, though, if nothing else, this catastrophe is what it will have taken to dispel one of the most awful myths of the last two decades: All that sneering on the radio about “the Irish obsession with property”. Like most things that have endured for a long time, it endured because it was wise. Property is, and has always been, the route from poverty to comfort and security.
And really, given that we are in this crisis, we should start again. From scratch. Tear up all the stupid “development plans”, and begin from a blank sheet. Focus instead on what a modern city, and a modern country, should look like: Focus less on “preserving the character” of Dublin, and focus instead on building a city that people want to live in, with high rise apartment buildings and offices, modern transport, green spaces, and so on. There’s a reason so many people want to live in Manhattan, and that few enough harbour dreams of a life in Ireland’s capital.
For two decades, our housing policy has been a catastrophe, as has our planning policy, and our general attitude towards housing. More than anything else, this will be the death of the modern political order. Sinn Fein are not poised to sweep to power, after all, because of crime or health. They’re at the doors, awaiting their chance, because on housing, the Irish establishment has a record of disgrace.