Housing output is up annually in recent years, and the public will reasonably assume that rising output will mean more housing available to buy, but the data shows something different.
Take 2020’s output of 20,676 houses. Of the three main types of housing built, single – or one-off – housing accounted for just under 5,000 houses. New apartments accounted for 4,014 new housing units, and scheme or estate houses made up the remaining 11,725 units.
One-off housing, some 24 per cent of the total output, is typically built and occupied by its owners, so doesn’t come to the market for sale. Likewise, apartments at 18 per cent of the total – up from 9 per cent a decade ago – are mostly built by or for investment funds and do not end up in the local estate agents’ windows for sale to the public.
What generally come to the market are the scheme houses, accounting for just over half of the year’s output.
Out of this output, however, comes social housing in the form of houses built by Approved Housing Bodies (AHBs) and local authorities, as well as “turn-key” purchases of new houses. The use of turnkey purchases has increased by 300 per cent since 2017, to 3,134 in 2020. Together, local authorities and AHBs have bought twice as many new houses as they have built in the same period.
Social housing accounted for about a quarter of all new houses in 2020 and is not available for the general public to purchase.
Despite rising output, the number of houses available to buy has remained consistent over recent years at about 7,500 per annum. This means that as the State and investment funds have increased their activities in the market, the share of new housing available to buy has decreased from more than half of all annual output in 2017 to a third last year.
Falling purchases
CSO figures for 2020 show that first-time buyers were 19 per cent of the market, and other buyers about 17 per cent, down on 2017 levels of 23 and 30 per cent respectively. Combined, the State and other non-household purchasers (usually funds) accounted for some 40 per cent of 2020’s housing market output. This figure was 12 per cent in 2017.
Therefore, instead of being driven by the new homes sector, the 43 per cent increase in new home completions since 2017 has been driven by the non-household sector. This has implications.
For example, despite seeing a modest 8 per cent rise in new house completions since 2017, Co Dublin has seen purchases by households fall by almost a third. At the same time, purchases by non-household entities have risen from a third to nearly 60 per cent. This reversal of market dominance suggests that local authorities, AHBs and investment funds have displaced households in the new-build sector in that location.
Should recent patterns persist, even if the Government does achieve its Housing for All policy target of 33,000 new houses built each year, it is likely that most of this growth will not be offered as houses for sale. Instead, they will be purpose-built housing for investment or social housing, or both.
Ireland’s socio-economic system is effectively based on home ownership, so this is important. Our desire for ownership is no post-Famine neurosis, but a logical response to legislation and finances. Renting for life is simply not feasible for most in Ireland due to a lack of permanent security of tenure and affordability issues. A State pension – or even a decent private or public sector one – is unlikely to be enough to pay rent and living expenses. Many lifetime renters would therefore require significant, and costly, taxpayer subsidies to survive after retirement.
In addition, the bulk of our personal wealth is tied up in property, mostly our homes. It is what owners pass on to their children, and increasingly will be used to release equity to pay for lifetime expenses such as healthcare. Protecting voter wealth – that is, house prices – at the same time as ensuring housing is available and affordable is a tricky feat.
It’s not just in the new home sector that the State and investment funds have been flexing their muscles. Non-household purchases of existing houses have also been increasing since 2017, jumping from 16 per cent to 23 per cent of all second-hand purchases in Co Dublin, and from 13 to 16 per cent nationally, for example.
Displacement effect
Councils are heavily involved here, averaging nearly 2,200 per annum second-hand purchases from 2017 to 2020. According to analysis by the Department of Public Expenditure and Reform, about a third of all second-hand purchases in Dublin 10 and Dublin 17 came from the local authority acquisition programme in 2019. In Monasterevin, it was 19 per cent, in Newbridge 18 per cent, and in Longford 12 per cent, in case it was assumed this was just a Dublin issue.
Out of all this, questions arise about the potential displacement effect that State and fund activity in the market may be having on potential purchasers. The emerging trends in the new housing market also raise a question of where the putative first-time buyer fits within this complex and increasingly competitive hierarchy of State, institutional fund, Approved Housing Body and everybody else looking to buy a house.
We could also ask how (or if) government proposes to get out of the pickle in which it finds itself whereby as housing output rises a smaller proportion is available for people to buy? And indeed, what is the future of home ownership, and therefore wealth, itself in this glorious new age of house-building?
Despite current policy’s title of Housing for All, the reality is more a question of “Housing for Whom, Exactly?”
Mel Reynolds is an architect. Lorcan Sirr is a senior lecturer in planning and development at the Technological University Dublin