On Tuesday, as the Government unwrapped its new plans for the Irish rental sector, two of the country’s most prominent housing experts were on opposite sides of the table at the Oireachtas Housing Committee.

Rory Hearne is a freshly minted TD. Running for the Social Democrats, he retained the Dublin North-West seat previously occupied by the co-founder of his party, Róisín Shortall. An academic, he has studied Ireland’s beleaguered property market at some length, publishing articles and books on the subject. 

Ronan Lyons is a professor of economics at Trinity, but his speciality is property. He was a member of the Housing Commission and has advised a string of international bodies and governments on housing policy. He also, as it happens, writes a column for The Currency.

Hearne and Lyons do not agree on much, but both believe the market here is broken. And on Tuesday, they were exploring ways of fixing it. 

Key to the discussion was the rental market, and the number of new rental properties that would need to come on stream to right the wrongs of the current system. 

Under questioning by Hearne, Lyons said that Dublin needed between 10,000 and 15,000 new rental properties each year to bring the market into some class of equilibrium. Given Dublin accounts for about 40 per cent of the Irish rental market, Lyons argued that the rest of the country needed more than 15,000 new rental properties to come to the market each year also. 

Given the fact that numbers have not grown in recent years, it begs a question: Can the government’s new plans deal with this shortfall?

The short answer is no. The long answer, sadly, is no as well. 

Based on my reading of the plans, the new policies – extending rent pressure zone nationwide, changing the system around “vacancy decontrol” and enhancing rights for sitting tenants – might prompt some institutional investment in the Dublin market in the second half of this year. But it will do little to trigger any serious investment in new rental investment outside of Dublin, where, arguably, the situation is even worse. Either way, there will be a significant shortfall in Dublin and across the rest of the country.

“We are years away from changing the dynamic of the market,” one senior figure told me last week. 

In truth, the various proposals unveiled last week are something of a camel, designed to do “something for everyone”. The trouble is, this “something for everyone” strategy only complicates an already complicated policy approach. It is simply not credible that the Government can simultaneously entice institutional investors to build apartments and houses, enhance the rights of sitting tenants, and help prospective renters. 

Yet, after various leaks, last-minute discussions, and compromises between government parties, this is what the new policies announced by housing minister James Brown have sought to do. 

The Government is trying to address market failures. 

But here is the thing: There is no “market”. 

It is a fiction dreamt up by economists to simplify one of the most complex things humanity engages in. This fiction is usually for an undergraduate audience. Even then, most undergraduates learn about market segmentation. 

Market segmentation happens when companies divide a broad market into subgroups based on shared features like geography, demographic elements, or something else. The goal is to identify and target specific segments with tailored marketing strategies, products, or services that better meet their needs, improving efficiency, effectiveness, and – spoiler alert – profits.

The Government’s approach to reforming the rental market is all about segmentation. There are broadly four “customers”: Existing renters, existing property owners, new renters, and new property developers.

Imagine the Government decided to prioritise existing property owners. What would that look like? Removal of all price caps, a market free-for-all. There is that term again. The result? Huge price spikes for existing renters, increased profits for existing property owners, and, as the scissors of supply and demand cut poorer people out of the new pricing system, increased spending by the State on emergency accommodation and traumatised families pushed into uncertain living patterns.

Imagine the Government decided to prioritise existing renters. What would that look like? Imposition of ever-stricter price caps, a ban on evictions of any kind, including sales to family members. Result? Existing renters see their rents stabilise, new renters find it ever harder to find new places to stay because existing tenants do not move on, and new supply never comes on stream.

Imagine the Government decided to prioritise new renters and new property creators. That would mean subsidising the cost of producing the new properties, allowing them to charge any price they liked to induce them to put their capital into the risky planning/objection/judicial review process for several years, plus HAP-like features for the new renters to cope with that change.

The Government cannot do any of these things in isolation. It must balance the objectives of the existing, and the soon-to-exist. The measures must be segmented. Prioritising just one of the four would so materially disadvantage the others that the consequences would be unforeseeable.

The segmentation means that, for existing renters, there is an enhanced national rent pressure zone and new protections. For existing landlords, there is a resetting of prices at higher rates between tenancies. 

For new renters, there is a push towards increased supply by encouraging new developers to build in newly-zoned land banks. For new property creators, there is a chance of earning a yield on their capital.

There are tens of thousands of individual stories, people making their best efforts given the constraints put on them. At least on that score, the economists got the description of society right. Everyone is looking after themselves, and when they do that, society tends to be a bit better off. Let’s hope the measures announced this week improve things for each segment.

Sadly, however, hope is not a strategy.

Elsewhere last week…

We published a two-part exposé by Niall on the business interests of Maurice Regan, the Kerry-born US-based construction magnate. Part one examined Regan’s landbank in Tipperary as he butts up against John Magnier’s Coolmore empire – along with their rivalry’s perceived knock-on impact on land prices. Part two revealed that he has Irish property interests at close to €135 million, with a new lending vehicle set-up and a €100 million biomass energy project in Co Meath in the pipeline.

The National Economic and Social Council brings together the pillars of society to try and shape the State’s strategies. While little known, its balanced positions often get absorbed almost by osmosis. Niall examined the work of Nesc shaping policy and democracy.

A decade on from starting her business, Katie Doran sold it to Consello and became the CEO of the group’s all-Ireland unit last year. She shared her experience with Thomas.

In the latest episode of Arts Matters, Mark O’Brien of the Abbey Theatre and Lynne Parker of Rough Magic argued that theatre is a cornerstone of Irish identity and economic potential. Speaking to Alison, they called for a shift in how we value, support, and invest in the arts.

Artificial intelligence is lowering barriers to entry for entrepreneurs, especially in software start-ups. It is also making the field more competitive, pushing founders to try more business ideas and build their own distribution channels. Last week, our new AI columnist, Ronan McGovern discussed how AI is changing entrepreneurship.