Report calls for urgent reform of the Irish housing market
- Irish rental market is ‘amateurish’ - 70%+ of landlords own 2 properties or less
- Residential investment CAN become economically viable but MUST professionalise
To read the full report please click here
Dublin, 29 May, 2012: A new report published today on Housing Markets Reform highlights significant issues facing Ireland’s housing market and puts forward recommendations for policy reform to address them. The authors of the Report (Dr. Lorcan Sirr, lecturer in housing studies and urban economics and Mr Tom Dunne, Head of the School of Real Estate and Construction Economics at Dublin Institute of Technology) claim changes in government housing policy can only be effective if significant changes are made in the structure of the housing market. Their report has been submitted to the Department of Finance.
Tom Dunne, who was formerly Chair of the Private Residential Tenancies Board, said the context for the report is that government housing policy is moving away from supporting home owner-occupation and therefore towards greater private sector involvement in the provision of properties to supply demand in both the private rented and social housing sectors. “It's not a case of one ‘housing market’: rather there are markets and sub-markets - of locations, building type, condition and financial status. Therefore there will be a need for variations in national housing policy and we need to plan for this.”
A functioning housing market makes a significant contribution to the overall macro-economy and a stagnant market depresses economic activity and inhibits growth. According to the report, however, there continues to be a lack of information on property market transactions in Ireland and this has impeded the operation of an efficient and equitable market and hindered its economic management.
Having analysed the market in Ireland, Dr. Lorcan Sirr says that more than 70% of Irish landlords own a maximum of 2 properties. “In reality the rental market here is quite amateurish. Residential investment can make money but a private sector developer will normally require in the region of 30 residential units to make a development economically viable in the long-term. They also want them under the one roof, which means new ways of planning for buildings of these volumes.”
The Report highlights a number of issues currently facing the various sectors in the housing market, including home owners, private rented and social housing. Dunne believes that the idea of what constitutes a successful property market needs to be addressed at the outset before moving to put in place the appropriate mechanisms for regulating and monitoring the market.
“The change of policy away from supporting home ownership will mean people will be directed towards the private rented sector. However, there is a lacuna in that market in terms of quantity of supply and quality and variety of rental stock. Also, the professionalism of the sector needs to be developed, as well as the legal and regulatory framework in which it operates.”
Lorcan Sirr says the whole area of rights and obligations must be put on a firm statutory basis and he contends that reactive, knee-jerk changes in economic and planning policy deter investment. “Experience elsewhere has shown that regulation does not deter investment: regulation attracts investment in the housing sector. We should plan to remove political involvement in housing markets, other than at national policy level, and we should consolidate housing planning and procurement so as to achieve coordination and economies of scale. This should be the responsibility of an independent body charged with monitoring the sector as a whole and taking measures to prevent or curtail property and/or credit bubbles. Good strategic planning on a national level supports the idea of a national landbank. The crucial issue is that the release of this national landbank must be timely, orderly and planned fashion.”
- Mr Tom Dunne is the head of the School of Real Estate and Construction Economics at the Dublin Institute of Technology and former chair of the Private Residential Tenancies Board (PRTB). Following 10 years in the property industry He has been lecturing in property and related issues since the 1980s
- Dr Lorcan Sirr is a lecturer in housing studies and urban economics at Dublin Institute of Technology. He has written for The Irish Times and Sunday Tribune, various journals and magazines, and provided commentary on housing, planning and related issues for RTÉ, the BBC, Bloomberg and CBC in Canada. He is on the editorial board of Housing Ireland.