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Economics, Sociology, Political science, 5.7 SOCIAL AND ECONOMIC GEOGRAPHY, Urban studies (Planning and development)
Ireland is suffering a housing crisis which will not be easily solved. This is not the first generation to struggle with housing problems. A review of history shows that property markets have pronounced cycles and a continual struggle to provide affordable housing with much direct state provision and extensive subsidises for home ownership. Part of the current crisis results from the abandonment of direct provision of housing by the state but the gradual withdrawal subsidies for owner occupation, has also made a contribution to making home ownership less affordable for many.
A crucial part of dealing with the crisis is to understand how property markets distribute scarce housing resources among competing households and to recognise that public policy will have to be framed within this understanding if it is to work.
Through property market cycles it is demand rather than supply that determines prices and rents. With recovery employment picks up and demand for housing increases but the capacity of the housebuilding industry to respond is constricted by the need to recapitalise and re-establish after years of a recession. This time we are experiencing a particularly severe supply constraint due to depth of the economic crisis which collapsed the housebuilding industry.
When there are shortages it is those seeking housing, competing with each other in the market, who drive rents and prices. When there are surpluses rents reduce. In the market, landlords and developers are price takers and seeing them as the cause of high rents is a confusion of cause and effect.
In the absence of supply the market does what markets do; rations the stock of accommodation among competing households. Those with the least ability to pay lose out to those with greater ability who get the available accommodation.
If we do not get public policy right those on low incomes will again be faced with the perils of a lack of rental security, security of tenure and the hegemony of landlord.
Getting the private sector to provide those on mid to lower incomes with affordable long term housing with rental security and security of tenure is going to be very difficult. The eternal conundrum of how to make investing in rental property attractive to investors on terms needed by long term tenants on modest incomes remains. It is likely that this can only be solved by direct provision at scale by state backed professional housing providers.
It is suggested therefore that government will have to get back to directly providing accommodation to the disadvantaged and will have to build up and hold onto a stock of accommodation to meet this need, which in urban areas particularly, is likely to be well in excess of the 10% provided for under measures such as Part V.
There is also a need to thoroughly reconsider the merits of subsidising owner occupation.
Dunne, T. (2016) The Crisis in Housing has Deep Roots and Supply Alone will not Resolve it. Annual Conference The Housing Agency , Dublin Castle 24 May 2016
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