The state of the current housing sector is immensely concerning. A study conducted by Sherry FitzGerald recently revealed only 11,050 previously owned properties available for purchase throughout the country in January. This represents a startling 27% decrease compared to the previous year and a remarkable 46% decline since January 2020, before the Covid outbreak.
In a troubling analysis, BNP Paribas characterised the Irish investment property market as ‘dismal’, noting an almost 70% reduction in 2023 compared to the prior year. The country may be approaching a distinct kind of ‘crash’, one not characterised by dropping prices but by the erosion of social unity and cohesion. If such an event occurs, it will contrast significantly with the circumstances from 2007 to 2010. Since 2011, there’s been a 19% surge of adults aged 18 and older still residing with their parents. Despite a series of 10 ECB interest rate hikes since July 2022, housing prices continue to ascend instead of decline.
For average income earners longing for homeownership, the goal continues to shift. Homeownership rates have significantly dropped, and failure to arrest this decline could result in crushed dreams and hopes, possibly triggering a mass exodus of some of our population’s most productive members. Recent findings from the ESRI reveal that whilst 80% of individuals aged 40 and over own their house, only one third of adults under 40 can claim the same.
The desire for housing continues to grow as the population rapidly expands. Conversely, the Government’s ‘Housing for All’ strategy is lagging behind and a surge in requirements is expected at a time when the trend seems to be towards decreasing investment.
The suggested alternatives have been far from convincing. Many such proposals tend to concentrate on actions like rental freezes and prohibitions on unfair evictions, which could potentially lead to a further shrinkage in supply by discouraging existing property owners. The emphasis should be on encouraging house construction on a grand scale and enticing new landlords into the market.
In spite of the earnest endeavours of devoted Ministers and public servants, their combined input lacks the necessary specialist insight when developing initiatives.
The envisaged situation is very distressing both socially and economically. To comprehend what has caused this situation, we need to examine how the ‘system’ operates.
Despite the earnest attempts of well-meaning Government Ministers, guided by equally well-meaning civilian and public sector workers, there remains a deficiency in specialist input required for the creation of new schemes. The issue was addressed four years ago by John FitzGerald, adjunct professor within the economics department of Trinity College. In a piece for this newspaper aptly titled: “The transition from specialist to generalist aptitude in public service is erroneous”, he advocated for the necessity of specialised understanding for effective policy making. This rings particularly true in relation to sectors such as climate change, healthcare and housing. He remarked: “Despite what we’ve learnt from the financial crash, top-rank hiring and advancement still prioritises generalist capabilities over expert knowledge and proficiency, undermining the true value and utility of expertise in enhancing policy creation.”
A notable drawback of the generalist system is the facilitation of routine personnel turnover, which results in each new hire having to familiarise themselves anew with the pertinent brief. This has been prominently observed in the housing sector. Amidst the prevalent discourse on the changing Ministers over previous years, scarcely any attention has been paid to the anonymous forces behind them, who wield significant power when mapping out the alternatives to fulfil government policy and its execution.
The absence of specialised skills is conspicuous and manifest in the extensive fallout and unforeseen outcomes of numerous policies. Examples of this include rent pressure areas, disparate approaches towards private and institutional landlords, inconsistent planning, the layout of the residentially zoned land tax, and the lack of effective measures for renovating vacant or run-down properties.
The prevailing belief is that, while governments and ministers set policy, it is the Civil Service that carries out those decisions. Civil servants are expected to provide all pertinent choices to the ministers for final decision-making. The issue lies in the fact that civil servants, being part of a generalist system, often lack the requisite knowledge to make truly knowledgeable decisions. Ministers largely rely on them, as well as their own advisors, who frequently have been appointed for their strong communication and media skills rather than for their specialised knowledge relevant to the brief at hand.
Political bodies often engage with a wide range of organisations including the Institute of Professional Auctioneers and Valuers (IPAV), which I am a representative of. However, with the exception of the genuinely transparent and democratic consultations in Dáil, public sector consultations often seem like superficial exercises where the advice given to Ministers is largely preset.
The severity of the problem is evident in firms such as Ryanair resorting to purchasing properties to provide accommodation for their staff.
Revamping the current system of policy formulation may necessitate audacious steps from the government, which could be difficult for some to accept. Given their maximum term of five years, governments may find it challenging to tackle housing issues, which demand prolonged strategies. The Department of Public Expenditure and Reform was established with the goal of addressing such concerns. Its stated mission, as per their online portal, is to ensure improved standard of living, infrastructure and public services for the Irish populace through better governance, effective delivery and capacity building.
The task of ensuring housing for the public beyond 2024 remains a monumental challenge. This pressing concern is mirrored in enterprises such as Ryanair, resorting to property purchases for accommodating their staff, an action justified by the company. The Institute of Professional Auctioneers and Valuers (IPAV) has been voicing its opinions on strategies to enhance sustainability and supply. It has suggested several measures including alterations in rent pressure zones and tax regulations for private landlords, incentives for small and medium-sized builders and developers, amongst others.
We should also draw attention to the influential role played by the International Monetary Fund (IMF) in our rebound from the former financial crisis. In a recent report, the IMF advocated the elimination of rent caps, citing this would promote the supply of rental housing. It also recommended fostering urban density, refining land utilisation and boosting construction productivity, along with ensuringbuilders’ confidence through better transparency and expedited approval procedures.
As we brace for a slew of elections, including a general election set no later than March 2025, the issue of housing might generate more controversy than elucidation. Amidst a deluge of reports and a plethora of state-supported organisations with overlapping duties, as well as a Housing Commission of which we’ve barely heard, the most feasible recourse might be setting up a task force with expert knowledge, following the next general election. This task force can then focus on executing a set of prompt actions within a strict timeframe.
Pat Davitt, the chief executive of IPAV, provided these insights.