Make trading up and trading down easier, says Marc Coleman

Lisney estate agents and the Green party seem odd bedfellows. But, if research by Lisney's John McCartney is anything to go by, Fianna Fail could do worse than include Green party policy on stamp duty in its next programme for government. McCartney's research asks good questions at a time when government might be able to provide answers. There is a qualification to this praise, which I'll come to (but it strengthens the main conclusions of the research).

Asking whether we use our housing stock effectively - do we match large families in large dwellings? - McCartney comes to some interesting findings. On average, we are not an "underhoused" nation. With 1,769,613 dwelling units and 4,239,848 people to live in them, there is one dwelling in our state for every 2.4 persons. Enough space, you would think, for everyone to hang their hat and coat? Well, not quite. The two central findings of the paper are that, while few big households live in very small homes, many small households live in very big ones. Of large households (with five persons or more), less than 1 per cent live in dwellings with two main rooms or less. Main rooms refers to bedrooms and living rooms. And less than 10.5 per cent live in homes with four main rooms or less. But 54 per cent of one-person households live in properties with five or more main rooms. Some 70 per cent of two-person households live in properties with five or more main rooms.

In the latter case, perhaps those statistics reflect our national style of home ownership; wanting not just homes but homesteads. Provided they are willing to pay the premium, which at a rough stab I'd guess is about 15 per cent of the house price per additional main room, that's fine. To the extent that they want to release that premium in the form of cash and trade down but currently can't, it's a major problem.

Here is where the qualification I mentioned earlier becomes relevant: one way or another, not being crowded for space comes at a price. Either one pays the aforementioned premium or one suffers a different kind of over-crowding; being crowded for time. It may be adequate in terms of its size, but our housing stock is, for many people, inadequate in terms of location. Data from the Central Statistics Office (CSO) shows that in 1991, a couple of years before the housing boom started, the average worker travelled just four-and-a-half miles to work. By 2002 that distance had grown to just under 10 miles. God knows how many miles it is now, but a guess of 13 miles does not sound unreasonable. More miles means more time and, if large families are not overcrowded in terms of housing space, this is the proverbial lump in the carpet at the other side of the room.

There is another price being paid, as McCartney himself notes: "We cannot discount the notion that space constraints are a factor in causing some couples to postpone family formation."

This observation is spot on. Data on birth patterns, again from the CSO, show a significant fall occurring between 1995 and 2004 in the birth rate among women in the 20 to 29 age group, and a corresponding rise in the birth rate among women over 29. Career decisions are partly a factor behind this. But the chronically high cost of affordable accommodation is another, possibly dominating, factor.

What is to be done? The last census shows that, far from increasing in line with population growth nationally, the populations of several town centres are declining as young people are exiled to commuter towns. The lives of thousands of people would be improved by encouraging small households to vacate large city centre dwellings and buy smaller dwellings. In fact, encouraging wouldn't even be necessary, we should simply stop discouraging them by abolishing stamp duty for those trading down and for growing households needing to trade up. The Greens have proposed this policy. Whether it contains Greens or not, the next government should implement it.

Marc Coleman is Economics Editor of The Irish Times- mcoleman@irish-times.ie