Is is time to think again about housing?
EU comparisons are fascinating and can tell us quiet a lot about ourselves. Be it that we do not have the most generous unemployment benefit in the EU. Or be it that we do not have a high crime rate in Ireland. Or be it that we have the third highest owner occupier rate in the EU.
Why? If you notice the company we keep in this statistic it is not the social democratic wonderlands. Indeed they are on the opposite side to us on the list.
Property Ladder is a term that has wrecked havoc on the nation. The property ladder was built on the idea of continuing increasing house prices. You buy a 1 bedroom flat, keep it for 3 years then then miraculously sell it for a bucket load of more money and by a 3 bed house. The idea that prices were presumed to rise so dramatically was really a self-filling prophecy. The myth was taken as fact and it was proved false. But the idea that fuelled the property ladder was that is was a ladder that everyone should take. Everyone had to get onto the ladder if you didn’t there was something wrong with you.
There used to be an old rule in Irish banking that one would never loan more then about 2.5 times the main bread winners salary. Remember that? Well during the Celtic tiger this figure went out the window. 10 times a salary was not unheard of. Now it is easy for us to blame the banks for doing all this. But people did take on these huge loans. Why? Because unlike much of the rest of Europe we strive to own. We were constantly told to get on the ladder quickly. That if you don’t then you will never own a home and that is a bad thing.
Another interesting fact to look at is that the housing stock is 410 units per 1000 which is below the EU average of 465. This figure seems to suggest that we need to build more housing. Which I have before. However something else that needs to be taken into account in that figure is the type of housing that we in Ireland have. On the continent there is very much a trend to live in apartments. Something that is not evident in Ireland. It is not unusual for a twenty something to have an apartment to themselves. Something that is unusual in Ireland. Where in Ireland we build housing estates on the continent they have apartment blocks.
The reason we build houses is because the largest destination for property in Ireland is the selling market not the rental market and the desire of most Irish people is to live in a house rather then an apartments. With the largest experiement in apartment dwelling ending up with Ballymun. While there is much talk of second homes and buy to let with scorn poured on to people who have them, on the whole the market is driven by buy to live. This is not the norm in the EU countries many want us to emulate.
We in Ireland have a Bull McCabe fascination with land. Probably a backlash to being dispossessed in the past. But it lead to the state where the 2.5 times the income rule on mortgages was disregarded as the object became to get on the property ladder no matter what the cost. The idea of renting for life is a sign of poverty. The old mantra of rent is lost money prevails even if it might not be true.
So what do we need to do as a nation? Firstly we have to have more regulation of the rental market. Better tenancy agreements longer term contracts etc etc. We have to grow up a bit and look at ourselves. Should we abandon terms like property ladder. We have to re-evaluate our priorities, we have to step back and ask ourselves the question. Does everyone have to own their own home?