LAST month, the Department of Housing, Planning and Local Government claimed that their plan ‘Rebuilding Ireland’ is working and is ahead of schedule. But, with each passing day, we know the housing crisis is getting worse. Demand for housing outstrips supply. There is a rental crisis.
Homelessness is increasing. Houses prices have bounced back to the heights of the pre-crisis era.
The housing assistance payment scheme is under significant pressure. The millennial generation are living longer with their parents than any other previous generations. All in all, the housing situation is a complete mess.
A further problem is that it is not just a case of build, build, build. There is a growing realisation that the communities we have built in the past have created many problems. For example, the Cork-city region is a low density city, it is one of the most congested small cities in Europe, it has 70 per cent car dependency and because it has a very large spread, we have a low potential for efficient public transport. We also have large communities in our city suffering from severe disadvantage and deprivation. And, there is a serious affordability problem resulting in exclusion, segregation and a growing problem of a society of haves and have-nots.
The recent city boundary expansion towards Blarney and Tower mean the ill-conceived plans of the past to spread the city-region are continuing. There is currently only zoning for sustainable development for 34,000 housing units in the Cork city-region (city-region based on my analysis of commuting patterns). Yes, there is zoning further in the county for a further 60,000 units. But, these zonings are in high-risk sprawling and or isolated remote areas in County Cork and are far from our employment hotspots. It is easy to envisage what will happen. Due to a greater potential of supply and lower land values in the county relative to the city, people will be incentivised to drive into Cork County until they qualify for the mortgage they can afford. The sprawl model of the past 40 years, unaffordability, segregation and exclusion in the city-region will continue.
Further, the underlying incentives of our national system are wrong if we want to fix this crisis.
Landowners are incentivised to hoard development land that is in scarce supply where people need houses.
Wealthy people are incentivised to invest in housing and land, driving up prices and squeezing out average and low income families out of the market.
When the problems are analysed, it always comes back to one issue as a central problem over others. And, that is the problem of land. Land is scarce. Unlike other goods, we can’t make more of it. And, as more and more people migrate to the city, land availability per person is falling.
So what needs to be done?
Unfortunately, the only way to ease this problem is to change the incentives.
Wealthy people need to be dis-incentivised from buying land and houses as investments. To do this, we need a land value tax. Also the benefit of a land value tax is that owners are incentivised to utilise their land efficiently, which will increase density.
At the same time, we must increase the supply of land where people need houses (in the city) and reduce the supply of land where people do not need housing (in the county). 34,000 units in the Cork-city region is not enough to even supply five years of housing to meet future demands, never mind, 30 years or 40 years.
A scarce supply of land and an absence of a land value tax only incentivises people with wealth to gobble up land and housing investments.
The last key solution requires increased leadership of local authorities in building communities. Local authorities need to return, with much more urgency (than is presently happening) to the business of building houses and of building communities. They need to lead rather than be led by developers.
The past suggests that we cannot rely on the private market to solve this problem. Presently, the city council owns land in Cork city that potentially can deliver 11,350 housing units. This is a start, but we need to expand public owned land supplies.
Further, I suggest we look to the best housing models used in Europe to think about how we build our communities of the future. Many countries in Europe are getting things much more right than we are. We must ensure the development of our city is inclusive to everyone (diverse and affordable), is liveable in terms of mobility and is well- designed and is dense to deliver upon necessary business innovation.
Solving this crisis will involve the need to use compulsive purchase orders more vehemently. It will involve the implementation of a Land value tax. It will involve moving to new models like a cost rental model and cooperative housing. It will involve a radical overhaul in our local and national institutions to increase their capacity to deliver. The time calls for radical change — but as a society, are we ready and willing?
Dr Frank Crowley is a lecturer in the School of Economics, UCC.