Fine Gael / Labour Housing Policy Statement - the bubble of aspiring home ownership burst?

An interesting little article appeared in the margins of the Irish Times last Thursday.  The amazing thing, as far as I can see, is that there has been very little coverage or comment on it.   Have a read:


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THE GOVERNMENT is to remove a range of incentives to home ownership under a new housing policy to be announced today.

The Housing Policy Statement will change the previous government’s encouragement of home ownership, on the basis that in the recent past much of the property bubble was caused by encouraging those who could never afford a mortgage to sign up to one.

The new policy, to be announced by Minister for State for Housing Willie Penrose, will instead concentrate on “more equitable treatment of tenures”.

According to Mr Penrose, “the overall strategic objective will be to enable all households access good quality housing appropriate to household circumstances and in their particular community of choice”.

The new policy will:

* Abolish all existing affordable housing schemes;

* review part V of the Planning and Development Act which obliges developers to sell a number of units as affordable homes.

* The review is likely to result in a greater emphasis in achieving social or “council” houses from part V. It seeks:

* the development of a vibrant, viable private rented sector through enforcement of higher minimum standards and increased security of tenure;

* An increasingly prominent role for the voluntary and co-operative housing sector, and

* Transfer of the rental supplement scheme to local authorities.

Mr Penrose said he hoped that “we will soon be in a position to announce the first social dividend project using Nama stock and involving one of the larger approved housing bodies”.

He added: “The Government’s new housing policy framework provides an ambitious programme for all who work in the housing sector.”


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What it means, I think, is that anyone who bought into a new estate recently, which contains many still unsold "units", can expect those units to be taken over by the local authority.   The so-called "obligation" for developers to provide "social and affordable housing" in all their developments is therefore removed at a stroke - not that there is much affordable housing on Shrewsbury, Torquay or Ailesbury Road during the "boom", as the developers wangled out of it. 

The move should, in short, continue the policy of social ghettoisation, as most of the new - still unsold estates - are in the nasty 'burbs of west Dublin and the like.  I know of a few such developments not that far from here, and I pity the poor buggers who stuck their necks out to get mortgages for the privilege of living in them.  

Another notable point is that if "a vibrant private rented sector" is to be achieved, Irish landlords will at last have to face up to responsibilities they have largely dodged to date.  Also, such a departure could possibly be the harbinger of Continental-style security of tenure - something that does not exist in Ireland at the moment.  If this new regime is to apply to housing associations, then surely it must apply to private landlords?  And about time too.

But what about the statement:

"The Housing Policy Statement will change the previous government’s encouragement of home ownership, on the basis that in the recent past much of the property bubble was caused by encouraging those who could never afford a mortgage to sign up to one."

Is that what now officially caused the bubble?  Surely the problem is that those who took out mortgages for houses - scared by the media that they could never afford one if they didn't -  were simply paying too much because of all the investor activity in the market?  Encouraged by Government tax incentives - and the silence of the Oppostion.

It isn't that they "could never afford a mortgage", it is because asking prices were too high relative to income.    They still are, by any established earnings/price ratio formulas.

As I say, an interesting one.   Just surprised there has been so little comment.  Maybe the Sundays will have something to say about it?