Why the role of scheme cannot be underestimated in solving the housing crisis
TO UNDERSTAND the importance of this Budget for housing, we have to consider that the Help-to-Buy scheme has been the single most effective aspect of Government policy since the start of the housing crisis.
With a Government devoted to private-sector-led solutions, at the expense of a reversion to old fashioned state social home construction, Help to Buy has pretty much been the only show in town when it comes to stuff that works.
Without its introduction in 2014, we would likely be looking at a far worse supply situation, perhaps still rising prices and certainly a greater level of hardship and homelessness than we are now facing.
So renewal of Help to Buy for two years rather than one (house building needs a longer lead-in) will prove vital for the continued construction of homes in numbers.
At this point, its end wouldn’t pole-axe housing output thanks to the synergy it has generated since 2014, but it would cut back construction on those sites still peripheral for economic viability. And these produce the cheaper new housing.
While much of the focus on Help to Buy has been about the buyers and who benefits and who is excluded, what has been forgotten is that Help to Buy got small and medium-sized builders back on the property ladder.
When they couldn’t get affordable finance or the profit margin simply didn’t add up, they were excluded from scheme development. Help to Buy made enough of a difference to get them back and its cancellation could knock plenty right off that ladder again in peripherally viable locations.
The resulting increase in housing supply Help To Buy has generated has already reached the point where prices overall have been affected.
Second-hand homes in some parts of Dublin have likely shed 10pc to 15pc in value over the last year. For every new home built, no matter how cheap or expensive, someone else is housed.
It means those people are not fighting for existing accommodation elsewhere. More houses means lower prices and, in the long run, lower rents.
While this Government doesn’t preach it loudly, its practices show it favouring largely private-sector-driven solutions. Its big Rebuilding Ireland plan is top heavy with private sector measures at the expense of State-funded ones.
In this Budget, it once again leans to the private sector by increasing the levels of Housing Assistance Payment, in turn increasing reliance on the private rental sector to provide social housing. At the same time, the numbers of social houses built old-style by local authorities are almost negligible by past standards.
Whether you agree or disagree probably depends on your political outlook. But all sides should accept the continuance of Help to Buy is vital.
At the same time an increase in spending on measures to fight homelessness of just €20m is quite simply execrable in a society where there are 100 new homeless children each month. But that’s the Government we elected.
For those interested in what goodies housing truly gets (or doesn’t), next comes teasing out the big ball of data due tomorrow from the Department of Housing.
Try to figure out among the big numbers what “new homes” will be built and which “new homes” are planned for existing private rental accommodation. Which will be Statebuilt or charity-built? And what does “social and affordable” actually mean?
It’s still a quagmire.