CORK is experiencing a commercial building boom right now and the inevitable follow on from that will be a sharp rise in population.
Two major announcements regarding the development of the docklands came this month with O’Callaghan Properties agreeing to purchase 31 acres of prime waterfront real estate for €47.5m next to Albert Quay.
Ambitious plans for a €140m development at Custom House Quay encompassing a 34-storey tower, retail units, cultural spaces, food and beverage businesses, office space, recreational areas, and a micro-distillery, creating up to 800 job, were also released to much fanfare.
Couple these with other developments at Horgan’s Quay and Penrose Dock and there is the potential for 10,000 jobs in the next four to five years.
Investors are placing their confidence in Cork but where are all the workers going to live? Average rents are tipping €1,300 in the city, while the average cost of a house in Cork at €235,000 is prohibitive to all but the most financially savvy.
The supply is nowhere near meeting demand and developers are complaining that it’s not economically viable to build long-term housing due to construction costs and instead are opting to build office blocks en masse.
Government projections contained within the National Development Plan predict the city’s population will hit 360,000 by 2040.
The workforce will flock to the suburbs and county towns but the city’s main transport arteries are already under pressure and suburban rail improvements and a light rail network are still some way off becoming a reality — so more cars will be squeezed onto our roads.
Somebody is going to have start building houses and apartments in large-scale projects and at the moment it’s just not happening at a fast enough rate.
Is it the responsibility of the Government and local authorities, or should the private market be allowed to supply homes with Government support? That’s the debate that is happening right now.
The cost-rental model of housing has been advocated by the Green Party for some time. This is a system whereby local authorities provide large-scale housing with rents — based on construction costs, and maintenance — used to pay back bank loans. The homes stay in State control and tenants have security of tenure.
It has the knock-on effect of regulating the private market by acting as a competitor to private landlords and could greatly reduce the problem of evictions which has dogged Cork in recent years.
For example, roughly three-quarters of Vienna’s near 2m population live in apartments with city authorities owning more than 220,000 homes while another 200,000 are owned by housing associations.
Green Party councillor Colette Finn believes Irish people make pragmatic decisions around housing and the long-held belief that homeownership is a cultural tenet is part myth and cost rental could be a way forward to address supply issues in Cork.
“Partly, what is happening in the housing debate is ideological in that the Government is very much leaving it to private forces to deal with the situation,” says Ms Finn.
“What the cost rental model does is it gives the responsibility of public housing to the State. The State owns and rents out the properties in perpetuity. The economic model is that the State has to get loans to purchase the houses, they pay that back through the rents they get through the lifetime of the housing scheme.
“It puts the State as a player and can essentially moderate what private landlords can charge as they essentially have control of the lever. It has worked in other countries but it is ideological and my own view is the Government is very much set against being a player in the market and they are essentially outsourcing social housing to private individuals.
“It’s not that private individuals are not concerned about housing and are not doing their best in order to come up with solutions but they simply can’t provide the volume of houses that we need and they don’t have the advantage of owning large landbanks like the Government.
“There is a complete over-emphasis on private solutions. Even at the moment with what they describe as social housing, 76% of that is people paying the Housing Assistance Payment to private landlords. That’s completely precarious. The tenants have no security of tenure and the affordability is also questionable.
“I am getting correspondence from people daily and they don’t know when they are going to be evicted. It’s heartbreaking. People need to have security of tenure for us to have a functioning housing system.
“We have this idea that we are addicted to home ownership. We are not at all. We make logical decisions that the only way to secure your home is to own it because if you don’t you are at the behest of a private landlord,” says Ms Finn.
Fine Gael senator Colm Burke says developers are willing to build apartments but need incentives — such as VAT reductions on construction costs — to make them profitable.
“One developer told me they would convert one of their development blocks to apartments if they could but they have a problem with viability,” says Mr Burke.
“The point that I would make is that apartments under a certain price should have reduced VAT but under the strict understanding, there is no increase in the build price to make up for it.
“If VAT was dropped from 13% down to 5% that could be one way of doing it.
“How will we deal with an additional 10,000 people coming into the city? The docklands developments are fortunate in that they are close to Kent Station and people can commute from places like Mallow, Cobh, and Midleton without having to drive, but a lot of younger people working in those offices would prefer to live in the city.
“We need to be far more prepared to ensure young people can invest in property and provide financial mechanisms that stay within the regulations for lending but at the same time making a property that is within people’s financial ability to pay back.”
Left-leaning city councillors are likely to raise the issue of cost rental models in the coming months as the newly-elected council beds down and examines the current state of housing affairs in the city.
Ms Finn believes the private market has been shown to stymie housing supply and the cost rental approach benefits both the tenant and landlord.
“We need to ask the question of the Government if they are ideologically opposed to local authorities entering the housing market. If not, what are they doing to support cost rental accommodation?” she says.
“Since we were formed as an independent country, we have been selling off publicly produced housing into private hands. We have to stop doing that. The cost rental model remains in public ownership because, for future generations, we need to have the supply.
“If not, we end up in the situation where we are now where we are totally dependent on the private market. As a nation, we need to have the debate as to whether we want to follow the European model where we don’t have boom and bust cycles of the UK/US model where private interests are supposed to look after housing supply but they actually don’t.”
Whatever approach is taken, Cork must address its housing capacity and it needs to do it now, or growth will be seriously compromised.