As the housing crisis is getting increasingly worse it seems that more than ever that we need housing movements proposing progressive solutions. However, the almost complete lack of government action to address the crisis would seem to suggest that progressive solutions are not getting through to policy makers and politicians. In this post, I offer four reflections for housing movements and those seeking a more just housing system to consider.
- The big picture: demographics, credit and scarcity
Housing is at the centre of three irreversible process: demographics; scarcity and credit. We need to understand how these interact to appreciate the importance of housing politics today. First of all, there are strong demographic trends exercising pressure on the housing systems of medium and large cities. Populations are growing and people are living longer. Household size is steadily falling – people are living in smaller groups. And, finally, economic activity is increasingly concentrated. This means cities like Dublin will see significant in-migration (especially rural to urban) as people seek out employment.
These demographic trends, however, only become a problem in the context of the way the economics of housing works in market driven societies. This is a broad topic, but the most pressing matter for housing politics is the relationship between the availability of credit and the scarcity of land and property. Houses, land and property in desirably located urban areas are inherently scarce. We can’t just produce more of land to meet growing need. As such, given the above demographic trends, more people are competing for a scarce resource.
But credit money is not finite. As argued by Adair Turner in his recent Between Debt and the Devil banks don’t just help money move around the economy, they create money by issuing credit. This means credit can increase with few limits. But if desirably located urban land and real estate is scarce the inevitable result of increased credit is price inflation. This means property and housing becomes something of cash cow but it also introduces instability and volatility into market driven housing systems.
Over coming decades, intense competition for housing and erratic rises and falls of house and rental prices will become the norm in urban housing systems. This will lead to the expulsion and displacement of lower income and working class communities, the accumulation of private debt and volatility in the housing system, the financial system and the economy as a whole.
- The market and supply: its weakness is our strength
Because of the interaction of the above three processes housing markets are volatile and housing and rent is expensive. Here it is crucial that we appreciate an issue which cannot be underestimated in terms of its importance for housing activists: the market cannot and will not provide affordable housing for low and moderate income households.
In fact, the market has never been able to provide affordable housing. A brief look at Irish history is revealing here. Before significant state intervention in the housing system most working people rented housing in the private rental sector. The vast majority of this was over-priced and had extremely poor quality – the tenement being the most famous example. This changed from the 1930s. In the decades in the middle of the 20th century 50% of all housing output was social housing. Meanwhile, home owners also benefited from huge supports, in the form of tax relief and mortgages provided by the state.
This pattern is repeated across Europe – up until the 1930s every city was dominated by expensive private rental accommodation of dreadful quality. Throughout the 20th century this changed radically and social housing and home ownership became dominant, but only with a huge amount of state intervention.
The reality is that it is not profitable to build housing for people on low and moderate incomes. The only way it can become profitable is if you allow those people to borrow huge sums of money, which inevitably results in uncontrolled house price increases and eventual collapse, as we know only too well.
- Non-market solutions: playing to our strengths
Only non-market based solutions to the housing crisis can work. There is also an important strategic political point here. The key weakness of market based approaches to housing is not that they are unjust or that someone gets rich off them – it is that they don’t work and can’t work. The main strength of housing movements is that because we are willing to advocate for non-market solutions we can provide solutions in terms of the supply of affordable housing.
I think it is fair to say that we have remained somewhat ‘on the back foot’ in relation to the issue of housing supply. Housing activists for the most part have focused on the problems and injustices with the current housing system and the ‘vulture funds’ etc. that make money from it. We have tended to focus much less on providing solutions in terms of housing supply. Yet this is exactly where our main strength lies and where we should focus our energy.
In doing this, however, we have to be creative and innovative. In particular, we should be willing to look at innovative forms of financing and providing affordable housing. This includes new forms of financing social housing, such as including a greater role for private finance (credit unions, pension funds and banks) and cost rental and self-financing models. It should also include a greater role for not-for-profit housing providers such as housing association, cooperatives or community land trusts.
In exploring these innovations, we should not be afraid of taking a new approach to social housing and we should not be ideologically blinkered: by developing pragmatic solutions we will be able to put non-market approaches to housing at the centre of the debate.
- More than bricks and mortar
Creativity and innovation are also crucial at other levels. A great strength of housing movements is that we appreciate that a house is more than bricks and mortar, that a home is both a fundamental right and is a key part of our social and community life. How we think about housing and in particular supply of affordable housing can draw strength from this insight.
For example, provision of affordable housing should also be linked to the task of creating sustainable, mixed income communities. Similarly, housing provision should be linked with the extremely important challenge of environmental sustainability. This is another major social challenge that the market has absolutely no hope of responding to. Energy efficiency, sustainable water usage and environmentally friendly transport planning can and should all be part of progressive approaches to providing affordable housing.
Mick Byrne
Mick Byrne is a lecturer and researcher in UCD School of Social Policy, Social Work and Social Justice and a member of the Dublin Tenants Association.
Ireland after NAMA 
November 28, 2016 at 4:31 pm
Good article. I agree fully with your main premise. Just a small caveat – it does not help to conflate physical homes with the sites they sit on. Residential buildings can become affordable if their sites and development land in general are socialised or otherwise put in trust for the benefit of the community– in perpetuity. The high cost of construction is the result in part, of the fact that it was a minor factor in developer profitability. Most of their profit was made on the upswing in site value. Even with lower cost sites following the bust, our historic legacy of outdated construction methods and costs are an impediment to delivery of affordable public/social/and private rental and purchased housing. We are working on this problem in the Community Land Trust Initiative; a cross professional and user discussion group. Contact me emer@esofuturedesign.ie if you are interested in contributing to debate. All welcome.
November 28, 2016 at 6:24 pm
Site costs were averaging 120K or 130k on each apartment that were built, section 23 was factored in to many sites and simply added on to the cost of purchase. Therefore 180k was being added to apartment prices before a brick was laid. There are still tens of thousands of private people in negative interest crippled with legacy debt. No effort was made to address the colossal mistakes of the banks. The government went along with the myth that it was all the mortgagees fault. The banks got their risk models all wrong sold products that should have been illegal by any normative, prudent banking standards and the Irish Central Bank went along for the ride until it all came crashing down. Then they closed ranks to pin it on the customers. BTW the EU is rapidly failing and mortgages will need to be recalculated in another currency. Of course the denial is almost 100% the group think is still 100%.
November 28, 2016 at 6:11 pm
As long as the government are taking over 50% I am being conservative of all rents collected in the private sector and as long as 40% of the cost of building a new house is tax then this crisis will continue unabated. I know I have built houses in the past I would not be seen dead on a site now they have killed the sector with pure greed while all the time pointing the finger of blame at the big bad wolf aka “landlords” and of course the developers were also put to the sword by ex civil servants who came back out of retirement to fleece tax payers.
December 1, 2016 at 1:26 pm
This article includes the fallacious assumption that housing in Ireland is not affordable.
For most people in Ireland housing costs are not excessive at all. Recent numbers (http://dkm.ie/en/publications/affordability_index) suggest that mortgage costs for a joint-income FTB family are about 20% of after-tax income.
For outside Dublin (which is where 75% of the population) this number drops to 17%. Spending one sixth of your household income on a dwelling which you eventually own is perfectly reasonably in any time and place.
From what I can tell, most of the media commentary on this issue comes from people on low incomes and/or volatile employment who want to live in core urban locations.
For many people – for example those who can buy a 150sqm home in Donegal at well below build cost – housing is by no means a problem.
December 1, 2016 at 7:19 pm
“Which you eventually own”? Sorry, the government advised by senior civil servants and lecturers, decided that the right to private property should be tapped, they used the “common good” clause and they interpreted that it was in the interest of the “common good” that citizens never be allowed to own their own homes and that henceforth or until SF come to power that all citizens effectively “rent” from the state. In short a return to feudalism in an effort to keep the Ponzi scheme of salaries and pensions going. As for affordability? I am far worse off today than my parents were my mother was able to stay at home and raise five children and my father drove a bus for CIE. Today they would both need PhD’s to even dream about the standard of living and care they were able to afford us. People are in absolute denial about Ireland today.