For the last couple of months there have been a number of media pieces suggesting that the Irish housing market is turning and house prices are starting to stablise more broadly and rise in parts of Dublin. It certainly seems from government data and industry and buyers that for some types of property (family homes), in some select places (desirable parts of Dublin) house prices have levelled off and are growing marginally. The proffered wisdom from these observations is that house building needs to start again.
There are two points to note, however. First, any stabilisation and recovery in the market is highly segmented by type and geography. Apartments are still in the doldrums, as is just about everywhere outside the M50. Secondly, and more importantly, concentrating on house price rises and the shortage of family homes in South Dublin deflects attention away from the much more serious set of housing crises in Ireland. They include:
Oversupply: The 2011 Census shows that there are 289,451 vacant units in the state, with an oversupply of c.110,000 (plus 17,032 under-construction units on unfinished estates) on a base vacancy of 6% and excluding holiday homes. This oversupply has been very little eroded over the past two years.
Unfinished estates: In 2012 there were 1,770 estates that still required development work, with 1,100 of these estates in a ‘seriously problematic condition’ and only 250 estates (8.5%) active. These estates suffer from a number of social issues.
Mortgage arrears: At the end of Q1 2013, the Central Bank reported there were 95,554 (12.3 per cent) private residential mortgage accounts were in arrears of over 90 days and 29,369 (19.7 per cent) of buy-to-let mortgages were in a similar position.
Negative equity: In 2012, Davy Stockbrokers estimated that over 50% of residential mortgage accounts were in negative equity.
Social housing shortage: the Dept of Environment reports that 98,318 people on the social housing waiting list in 2011 (65,643 of whom can’t afford the accommodation they are in).
An over-reliance on unaffordable private rental stock: In November 2011, the Department of Social Protection reported that 96,100 households were receiving rent supplement. Much of the rental stock is sub-par in standards.
Stalled regeneration: Regeneration projects have largely halted leaving hundreds of families living in substandard and unhealthy accommodation whilst they wait for projects to restart.
Pyrite-infected homes: The government recognises that there are 74 estates, consisting of 12,250 units, whose foundation hardcore is contaminated with pyrite, though it seems clear that there are other infected estates.
Build quality: There are a number of estates affected by build quality issues, the highest profile of which has been Priory Hall.
These are all serious issues which are largely being ignored by the government and media beyond acknowleding occassionally that the issues exist.
Housing policy and the market in Ireland is largely broken. New housing in South Dublin is not going to fix it and rising house prices is not evidence that things are getting better.
I’m not saying that there should be no new housing in South Dublin. If there is sure-fire demand, then fine, the market and investment capital can supply. Nobody is stopping anybody from developing such housing, certainly not the government.
Government investment, however, needs to targeted at sorting out the issues above, much of which has the potential at creating construction work and economic growth, whilst addressing serious social need.
What would be really nice to see is a comprehensive, integrated housing policy that puts together a five to ten year action plan that recognizes that all these issues are interrelated and need to be tackled in concert rather than in a piecemeal, ad hoc fashion. Now why can’t the media and property professionals focus on persistently arguing for the need for that? A cynic might think that it’s not property supplement friendly.