Michelle Norris is one of the most articulate and thoughtful voices on housing in Ireland. The director of the Geary Institute for Public Policy and Professor of Social Policy at UCD, Norris has spent her life researching the management and financing of social housing as well as the intertwining nature of property and the welfare state in Ireland.
She has served on the board of the Land Development Agency, the National Economic and Social Council, and in 2020, was appointed an expert advisor to Housing 2030, an UN-backed body that helps governments all over the world.
Many commentators on housing and property in Ireland plump for one-liners and superficial analysis. Norris uses data and seeks to understand the relationship between government, families and the property system.
And her analysis is crucial to understanding what couple be one of the biggest challenges this country will face over the coming decades: a generation devoid of assets.
In her book, Property, Family, and the Irish Welfare State, Norris argues that, for decades after it came into existence, the Irish state based the welfare state first upon land ownership, and then home ownership. This resulted in 70.8 per cent of Irish households owning their own home in 1971 relative to 50 per cent in the UK and 35 per cent in Sweden respectively.
It is a topic that Stephen also examined in a four-part series last year, in which he wrote:
“Rather than creating large-scale public housing, public amenities, and public spaces, our welfare policies were designed to reinforce the highly progressive move to distribute land ownership, comprised as it was of small farmers supporting an agrarian society, rather than distributing income, or wealth.”
Essentially, property underpinned the welfare state; the asset of home ownership allowed individuals to fund their retirement and store, and accrue, wealth. It was the state’s safety net.
However, as we all know, that net is now in tatters. A generation is locked out of the property system, and, as such, is no longer in a position to store and accrue the wealth they require for the future.
The linkage between wealth and property here is undeniable. Owner-occupied households have far more in euro terms in savings, bonds, and shares than those who are renting. The voluntary pension pots are four times as big for those owning properties rather than renting them.
Look at the tax system. It is geared towards property as a means of wealth accumulation. It is why the property taxes are lower here than elsewhere.
Yes, that generation has access to better schools, better hospitals, and a better standard of life. But, fundamentally, they will be poorer than their parents if they are unable to acquire property.
And this situation is not going to remedy itself any time soon. Ronan ran the numbers in his column last week, and those numbers were grim. While almost 30,000 homes were completed last year, Ronan wrote that just 22,300 were started – down from 25,400 in 2021. In the first nine months of 2022, there was 10 per cent fall in the number of homes for which planning permission was granted compared to the same period a year earlier.
Compare those numbers with what it contained in a report by the Housing Commission, due to be published shortly but widely leaked at this point. It estimates that Ireland would need somewhere between 42,000 and 62,000 new homes built per year to deal with the expected rise in population.
Based on Ronan’s numbers, we have hit peak construction already. And it is nowhere near enough.
So, in the absence of property as an asset, how else can the state ensure that a despairing generation can accumulate and store wealth?
This was the subject of Stephen’s column last week, where he called for investments and pensions to be given the same tax treatment as property, because as things stand, our approach to saving and investment is primitive and punitive.
As Stephen put it:
“Thanks to the tax system, those who already have savings are trapped in a world of mediocre returns in multi-asset funds or lots of taxes in ETF-type structures. Woe betide them if they try to stock pick individually, so instead they do what any boundedly rational person would do, and just invest in housing. Those who don’t have savings are hardly incentivised to do anything except save for a house.
“Ireland is changing, and our approach to savings and investment needs to change too. It’s the only rational thing to do.”
Ireland’s housing crisis is a generational event. Even if it is fixed, the damage will be done to an entire generation. We are not in a position to build enough houses for the population we have, and that population is rising.
This raises long-term questions about how the state provides for those locked out of the system. Yes, we need more houses and more apartments. But, in the absence of that, we need a way to ensure that those who are locked out of the system can provide for themselves in the years ahead.
Stephen put forward a suggestion last week. Undoubtedly, there are other things that could help. But it is a conversation that we need to have right now to avoid a widening gap between those who have and those who do not have.
We need both long and short-term policies to deal with the societal effects of the housing crisis.
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