| Plenty of new houses, but not in the right places |
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| Unfortunately the Annual Housing Statistics Report for 1999 differs from reality. |
The Annual Housing Statistics Report for 1999 just published by the Department of the Environment and Local Government contains an interesting picture on the state of the housing market. The official slant put on these statistics each year, and 1999 is no exception, is that a record number of houses have been built and that this is alleviating the huge demand in the marketplace from first time buyers and returned immigrants. Unfortunately the reality is quite different and supply is still being stifled by the hostile and outdated planning system that exists - both at local and national levels.
Where demand is smallest
The official figures state that 46,512 houses were built in Ireland in 1999 compared to 43,349 the previous year. A closer analysis of these levels reveals that 95% of the increase is attributable to the private sector and not to the Local Authorities but, even more importantly, the increased construction activity is taking place in areas where it is least required - where the demand is smallest - and where it makes no impact on the dilemma facing home buyers in the main centres of employment.
Combined housing completions in 1999 in Dublin, Cork, Galway and Limerick were almost static, while completions in three of the counties forming part of the Greater Dublin Area, that is Kildare, Meath and Wicklow, were actually down on the previous year. The combined total for these seven counties was up a mere 500 houses on the previous year, from 24,370 to 24,870. Any meaningful impact on the housing crisis would have needed 6,000 - 7,000 new houses in these counties.
The increase in housing activity that created the so-called ‘record’ figures actually occurred mainly in Clare, Donegal, Laois, Leitrim, Mayo, Tipperary and Wexford - and a high proportion of these were holiday homes with little relevance for first time buyers or families.
Dublin salaries driving prices
The other main facts contained in the Government statistics are, first, that first time buyers grants were only paid out in 9,129 cases, compared to 10,349 in 1998, reflecting the inability of young people to find a home. Second, in the Dublin area, a combined income in excess of ?50,000 for couples buying houses in 1999 represented 39.5% of the total mortgage market - compared to a mere 6.7% the previous year. This is a startling figure and shows the impact on the Dublin housing market of high salaries for working couples in such areas as financial services and hi-tech industries. It explains the background to some of the higher prices being achieved for housing in the Dublin area for the past year.
Welcome moderation
Finally, despite the obstacles placed in the way of developers and professionals in trying to obtain planning permission and meet housing demand where it is most needed, there was a welcome moderation in the rate of house price increases last year - down from over 30% to 20%. It could have been down to single figures if radical measures had been introduced to deal with the blockages in the planning system and in the provision of essential services. The general outlook for house prices is good. The market is now cooling down coming into the summer and hopefully a more moderate rate of increase will carry through to the Autumn. It is in everyone’s interest that this should happen.
Negative
One of the negatives on the horizon, which could de-stabilise the market and interrupt the moderating trend in prices, is the Government legislation on the provision of social housing. As presently drafted this will undoubtedly have the opposite effect to that desired - it would reduce supply in the private sector and will do nothing to improve affordability for first time buyers. It is an ill-advised attempt to move the burden of social housing from the State to the private sector. It has the potential to create social divisions where none previously existed. It would also foster a dependant culture here, like they have in the U.K., instead of an enterprise one which we have always had. Hopefully there will be more genuine consultation on this measure before irreparable damage is done to the housing sector. A more practical solution would be the shared ownership and affordability measures proposed by construction industry representatives.
Action on densities
The Government Guidelines on Higher Densities are admirable but it is proving almost impossible to get most Local Authorities to put them into practice. This measure, along with the reform of the planning system and the provision of services are the key factors which will determine adequate supply of housing, where it is most needed, at affordable prices in the years ahead. |
Ken MacDonald, FIAVI, is Managing Director of Hooke & MacDonald, auctioneers.
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| Article appeared in the May 2000 issue.
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