The growing crisis of homelessness in Dublin and its causes

There have been a few headlines recently about some families losing their rental accommodation as rents increase and becoming homeless (see these stories: one, two, three, four; also listen to this radio piece on RTE). It is reported that homelessness is on the rise and a homeless crisis is emerging in Dublin in particular. According to Dr Dáithí Downey, Deputy Director of Dublin Region Homeless Executive (DRHE), paraphrased in Saturday’s Irish Times, the homeless crisis is ‘bloody awful and getting worse’, with Jan O’Sullivan TD, the Minister for Housing, admitting that there is ‘no doubt’ that the issue of homelessness among families is a growing issue.

So what is the situation in Dublin at present? 

According to DRHE, in 2013 a total of 4,613 unique individual adults used homeless services in Dublin (across all funded NGO’s and statutory services – a full report for 2013 is available from DRHE upon request).  The demand has strengthened and changed in character since Autumn 2013 with more families with child dependents experiencing homelessness.  The Simon Community report that in 2012, there was an increase of 24 per cent in those using their services, to over 5,000 individuals and families.

During the week beginning April 28^th 2014, the DRHE confirmed there were 184 households with dependent children accommodated in 21 commercial hotels across the Dublin region in lieu of provision of more suitable emergency accommodation for families due to a lack of capacity in usual emergency accommodation.  The majority of these families were welfare dependent private tenants.  The decision to use hotels is seen as a last resort taken in order to prevent any increase in rough sleeping in Dublin, especially among adults with dependent children.

Dublin’s homeless services secured an exit to tenancies and independent living for 793 persons in 2013. This is down by 10 per cent on the previous year’s 879 exits, and a similar downward trend exists for 2014.

So what is causing the rise in homelessness, especially amongst families in Dublin? 

Here’s what I think is happening.

1) From 2012 onwards there has been an increasing shortage of supply of property for purchase and rent in Dublin city due to in-migration and lack of construction.

2) The increasing demand for tenancies has led in turn to a rise in rent due to demand outstripping supply.

3) The rise in rent has been bolstered by new institutional investor owners, and by buy-to-let landlords facing a move from forbearance to foreclosure, seeking a certain yield by squeezing tenants – moving rents up at a rate significantly above inflation (25% to 30% increases in some cases)

4) Families who are income insecure – low wage, uncertain hours, flexible working, dependent on welfare – cannot afford the increase in rent, and rent supplement is not sufficient to cover the gap. They are being priced out of their homes in favour of those who can afford the new rental price.  Such pressure is not aided by tenants often not knowing their full rights or seeking redress through the Private Residential Tenancies Board.

5) These families find it difficult to find alternative private rented accommodation due to rent inflation across the rental sector and landlord preferences for tenants not reliant on rent supplement and discrimination against such tenants. This is also reducing exit routes from homelessness.

6) There are nearly 90,000 households on the social housing waiting list and it is therefore almost impossible to parachute newly homeless families immediately into social housing.  Consequently, those pushed out of the private rental sector end up in emergency homeless accommodation.

7) This process of creating new homeless families is likely to continue as rents rise given the present reliance on private rental sector for new social housing provision.  Moreover, it might be bolstered if repossessions increase as expected from this summer onwards, with former homeowners becoming homeless.

So what is the solution?

DRHE recognise that the use of hotels is both an inadequate and inappropriate way to meet the housing needs of homeless families and can only be considered a short-term respite from being shelter-less and also that it is financial unsustainable. They are projecting a final year cost of over €4.5m for the use of hotels in 2014 if no alternatives are brought forward. So what is required?

First, the state needs to invest in creating new social housing – both refurbishing empty, unoccupied and derelict housing stock in the city and creating new suitable stock in control of the local authorities not private landlords.  The Dublin local authorities have already submitted plans to government for the acquisition and refurbishment of stock for homeless households that will requires a projected capital budget of at least €10.5m to realise.

Second, rent control needs to be introduced that limits unregulated rent increases that are far in excess of inflation.  This needs to be accompanied by an increase in tenant rights that offers them enhanced protections as is common in continental Europe.

Third, there needs to be an additional investment into homeless services to provides the resources that will enable them to more adequately deal with the crisis.  Wishing it will to go away will not work.

Rob Kitchin

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Daft.ie/AIRO property value interactive map tool

Today marks the launch of the Daft.ie/AIRO property value interactive map tool, put together by Ronan Lyons (Oxford University) and Justin Gleeson (AIRO/NIRSA, NUI Maynooth). The system provides the first, detailed localised view of the property market in Ireland based on 1.1 million daft.ie property records (the CSO residential property price index divides the data into national and Dublin only).

Importantly, it provides comparable data from 2007-2012, allowing us to see the change in sales and rental prices and expected yield over the course of the crash for 2, 3 and 4 bed properties (the new government house price database when it is released will only provide data concerning 2010 onwards). Sales data is provided for 1,117 areas, rental data for 312 areas, and yields for 4,509 areas. The method for calculating the average price per area is set out in this paper by Ronan Lyons.  The methodology used makes each area comparable by controlling for differences in properties (such as type and size), and it should be noted that each area covers a range of locales and provides an average drop in price.

The tool is fully interactive and free to use; to access it go to www.daft.ie/research  To get detail on any area click on it and a pop-up box will appear providing data about that locale.  Scroll down the pop-up box to see a graph relating to the area.  If you hover over the bars in the graph the specific data will appeal.

The data is broadly in line with the CSO data re. total price drop, but shows the variance across the country. Nearly all areas in the range -40 to -60% (a reasonably large range).  A few areas are above -60%, and a few below -40%.  What the data reveals that there are local markets operating across country reflecting local conditions.  Whilst the data are asking prices they are very strongly reflective of actual sales price (which the property sector generally reports as being between 10-15% less than asking price) and shows relative prices and change across country as the data is consistent across space and time.

Hopefully the server will hold up this morning as people try out the tool.  If you have difficulty getting access, please try again later.  Also check out the dozens of other mapping and data visualisation tools on the AIRO website.

Rob Kitchin (@robkitchin) and Justin Gleeson (@AIRO_NUIM) (Ronan is on twitter at @ronanlyons)

 

Property market by sector and region for 2011

The Society of Chartered Surveyors Ireland and RICS have published their annual property report for 2011.  This report used to be a joint venture with IAVI (Irish Auctioneers and Valuers Institute) before it merger with The Society of Chartered Surveyors.  The report is based on a survey of 319 chartered surveyors who work in the commercial, industrial and residential property sectors.  It therefore reflects the opinions of members, as opposed to being drawn directly from sales/rental databases.  Nevertheless it does give us insight into what is happening in the market from the perspective of an informed group of actors.  The report provides both a sectoral and regional analysis, with year by year changes in prices for 2009, 2010 and 2011, but no detailed data on overall change since the peak of the market.

The report argues that the property market has now become geographically and sectorially specific in how it operates, with locales and types of property performing differently as the pressure of the crash has come to bear on it.  For example, they argue there is a notable urban/rural difference in rents and prices of residential properties, and whilst development land has plummeted by up to 95% in value, agricultural land has not fallen to the same degree and has risen in many areas last year.  They argue that the largest factors impacting on the property market have been the lack of mortgage credit for the residential market and the lack of capital finance for commercial purchases, along with fears over unemployment and pay cuts, and weak sentiment.  Notably there is little discussion of oversupply, negative equity, mortgage arrears, and immigration of household formation-aged population.

In terms of sectors, the report details:

Residential new houses – very low levels of activity characterised as ‘non-existant sales’; apartments falling in price more rapidly than houses; cash buyers dominate where sales are occuring (mainly in and around Dublin).

Residential secondhand houses – very low levels of activity; prices continue to fall, but influenced by location; falls generally in-excess of new homes; homes not coming onto the market unless absolutely necessary; very little trading up; some pick up in sales in Q3/Q4 but mainly for houses <175K; cash sales typically 60% from peak

Residential rental market – solid levels of activity; rental prices holding up with little fall in price over year; reports of no overhang of rental property and a shortage of family home stock in some areas, notably Dublin.

Offices – demand very low, weaker than 2010 and characterised generally as ‘no activity’ and rents/yields falling; city centre Dublin slightly better in activity but terms under pressure and rents falling; rents nationwide typically down 50% on peak.

Retail – sales ‘dead in the water’; rents down nationwide by 50-60% from peak; notable move to short leases.

Pubs and hotels – continued closure of pubs; no sales; banks won’t lend to the sector; Dublin faring slightly better than elsewhere; NAMA has unrealistic expectation re. hotel sales

Industrial property – sales almost non-existant; high levels of vacancy in small units; falling rents

Investment property – sales almost non-existant in commercial and residential property (except for limited cash sales)

Development land – prices down 95%; market not anticipated to pick up any time soon; NAMA set to dominate any activity

Agricultural land – described as the only functioning market, with prices rising in 2011; rents also rising

Price drops across sectors is generally much larger in Ulster/Connaught than Dublin, Leinster and Munster; and generally larger in rural areas than urban areas.

The report highlights that many chartered surveyors find dealing with NAMA very frustrating and that they anticipate NAMA will be a feature of the property landscape well into the medium term.  The forecast for 2012 – residential will remain weak, commercial to start to pick up in the second half of the year.

That analysis all seems pretty reasonable to me, though I’m not convinced that the commercial market will pick up to any great degree unless economic activity does likewise, especially a rise in employment that requires space. And there is a lot of vacant commercial space across the country that means that supply massively outstrips demand that will work to keep prices depressed for some time.  For office space in Dublin, vacancy is >20%, and in some parts of the city >40%.

What this report, and others from the property sector, highlight is the need for high quality, independent and public, commercial property and land data re. sales and rents.  The emphasis to now has been on establishing a house price register.  We need the same for the commercial sector, so that local authorities and government departments know what is happening across the property sector when undertaking planning decisions.  It would also aid NAMA in its work and form a backdrop that would help banks make sensible decisions re. lending for development.

Rob Kitchin

 

A Brief Return to Grafton Street

I have previously commented on this site about the impact of unsustainably high rents on businesses in Dublin city centre, and particularly in the Grafton Street Area. Almost a year on, things are beginning to look a little different on Grafton Street. At the Southern end of the street, for example, Dunnes Stores has reopened in recent months and a Disney Store is due to occupy the unit next door, with work currently underway.  Meanwhile, across the street a 3D Games shop has opened in what was then a vacant unit.  Further down the street, the former West Jewellers  has recently been bought by Brereton Jewellers and is therefore likely to be reoccupied in the near future. Furthermore, the two units on South Anne Street, which appeared in the image with West Jewellers last February, are now occupied (Opticks Eyewear and Madison furnishing and interiors store).

West Jewellers and Surroundings, corner of Grafton Street and South Anne Street, February 2010. Photo by Philip Lawton

West Jewellers and Surroundings, corner of Grafton Street and South Anne Street, December 2010. Photo by Philip Lawton

 

 

 

 

 

 

 

 

Still, however, the issue of rent is high on the agenda. One graphic illustration of this is the ‘High Rents Are Killing Our Jobs’ sign which hangs above Korky’s shoe shop on Grafton Street. Spreading the net a little wider, but staying in roughly the same area, the current crisis has claimed a number of high-profile eateries.  Although the closure of some ‘Celtic Tiger’ establishments, such as Nude on Suffolk Street, may be an indication of shifting consumer habits, a letter to the Irish Times, last Friday, 14th January from the owners of  Mermaid and Gruel on Dame Street cites what they refer to as the “…intransigence of landords who still demand boom-time rents…” as the predominant factor in the closure of their restaurants. While the ban on upward only rent reviews and the fall in values offers potential for new-comers, it seems high rents are still placing a serious burden on existing businesses. Furthermore, this is not in any way confined to the area that I have focused on here, but, as highlighted by various media sources (eg; Galway and Athlone), is a national issue.

Philip Lawton

 

Korky's Shoe Shop Grafton Street, December, 2010. Photo by Philip Lawton