# Irish Housing - The truth!



## Lemurz (25 Jul 2005)

An interesting interview from the Irish Times...........

Economist and senior research officer at the Economic and Social Research Institute (ESRI) Edgar Morgenroth believes that huge damage has been done to Irish society in the past decade, which will not be undone for many decades to come.

The damage has been caused by the relatively unmanaged way in which so many tens of thousands of small, often badly built housing units have been constructed in the Dublin region during the past 10 years.

These houses, he says, so many of them built at a distance to the place of work of their inhabitants, involve a social and economic cost that is hard to measure but is self-evidently huge. He does a very blunt series of sums to give an idea of what is at issue.

The average person living in the greater Dublin area and working in Dublin, spends two hours per day commuting. The equivalent for a person living in established built-up Dublin is one hour.

In a 220-day public service year, a worker in the greater Dublin area therefore spends 440 hours commuting in his or her working year. That makes for 55 eight-hour days each year, "a lot of days, a lot of time".

Imagine half that time was spent working, at the minimum wage rate of €7.65 per hour. That would make for earnings of €1,663.20 in a year (220 x €7.56). There are approximately 70,000 people in the Dublin region who travel back and forth to work in Dublin city each day, making for €116.42 million in annual "lost earnings", so to speak.

"That's very crude and without a doubt a huge underestimate," says Dr Morgenroth. "It is not factoring in the actual transport costs, the environmental costs, and the social or community cost. There are also efficiency losses due to the tiredness of the workers who are doing all this commuting.

"People don't see their children let alone get involved in activities in their community. This pattern has implications for children and their future well-being. That is speculation but I think it is reasonable."

The congestion caused by all this commuting by car also has economic costs. The time it takes to travel from the airport to the Intel plant in Leixlip, Co Kildare, is a lot longer now than it was when the plant was first established.

Dublin, says Dr Edgar, is almost unique in having so many people choosing or having to live so far away from where they work.

He also says that the urge so many people have to live in one- off houses outside our cities is "not normal" and would not exist if our cities were nicer. The phenomenon is not due to cultural factors or links to the land, he says.

"Our built environment is not attractive enough."

One of his main areas of research with the ESRI has been in the economics of regional development and he recently addressed a Heritage Council conference on the development of villages. The GAA has been on to him to discuss the issue of large housing estates being built alongside small rural villages, because of its concerns over how it affects the organisation.

"It's nice to know the GAA thinks about the implications of this sort of thing. I sometimes think that not enough policymakers think about it."

He points to investment in schools and says there seems to be a "disconnect" between the Department of Education and local authorities who are rezoning land. He points to investment being approved for schools that are soon going to have much lower attendances, while schools that are soon going to experience an explosion of demand are not assigned funds.

While generally not being in favour of intervention in the marketplace, he says the problem with housing in Dublin is that there is intervention in the market, but it is inefficient.

"Why not limit the tax advantages that are available to certain types of developments? For example, no tax breaks for developments that are not suitable for family living."

Large, low-quality developments made up of small one- and two-bedroom units "built for letting, where no-one would want to live" may be profitable for developers but are not in the national interest and are a waste of resources.

He says that, even where housing is being built alongside villages, far from the workplaces of the future residents, "we are making a mess of it", building low-quality "flatpack developments".

"If we are not going to house people near where they work, at least we should plan what we are doing properly."

Overall, however, what is needed is quality urban environments built close to where people are going to work.

There is a view, he says, that it is too late now, that the "horse has bolted".

However, projections for future economic growth and population growth suggest that the market for new housing units is likely to last for a number of years yet. So there is still some value in looking at what we can do in terms of policy.

"If we don't get it right then we will be left with what we've done for a long time. We've been waiting 10 years now to get it right and it hasn't happened. Ten years' housing stock must be a fairly large proportion of what is there and future generations are going to be left with it."

Because housing is now so much more dispersed than jobs are in the greater Dublin region, and because of the absence of good, integrated public transport, people in the region make unusually high use of cars.

"The greater Dublin area has a lower car ownership than the greater Munich area, but the usage and level of congestion is much higher here."

If economic growth continues, then the congestion and the commuting times, and the associated costs to the economy and society, will continue to grow.

Dr Morgenroth comes from Düsseldorf but came to the Republic when he was 16 years old. He sat his Leaving Certificate and studied at Maynooth University before doing his doctorate at Keele in England.

He spent five years farming in Co Monaghan and still lives there. He has been working with the ESRI for seven years.

He is sometimes asked to give briefings on the Irish economy for visiting groups, including ones from Germany.

"I tell them there has been a lot of economic growth, huge employment growth, the ending of unemployment, but that there are also housing market problems and a lot of congestion.

"I also say that the relative position of the poorer parts of the country is getting worse. I tell the truth. All that glitters is not gold."


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## RainyDay (25 Jul 2005)

Hi Lemurz - I'm guessing that you have copied this material from elsewhere. Can you please confirm if the material is copyrighted? Note that in our , we discourage posting of links without some associated commentary or discussion. Would you like to kick off a discussion on this topic?


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## sherib (25 Jul 2005)

Lemurz - With respect, isn't that something everyone knows but individually can do little about? If the economists and planners had had crystal balls, _perhaps_ it would have been different but none of the experts predicted the rapid economic growth that has taken place in this country. It's not perfect but infinitely better than it was ten to fifteen years ago. This, by the way, is not to defend the absence of proper planning. Maybe it's a case of - 



> *Two steps forward, three steps back*


or is it the other way round? Hindsight is great! I do agree we have paid a high price for our current prosperity but it wasn't _that great_ for a lot of people not so long ago. Everything comes at a price except maybe in that perfect world.....


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## Betsy Og (26 Jul 2005)

Sherib

While its true that ideal worlds dont exist, and I suppose "if you want an omlette you gotta break a few eggs", do you ever get the feeling that we, in Ireland, dont do town planning, or most types of planning indeed, very well??

I'm not sure theres much to distinguish the Tallaght disaster from more recent building except the hope that the socio-economic background of the people buying expensive houses will keep the thing afloat.

While thankfully I've escaped the greater Dublin area, I do share the concerns of those who wonder what Lucan, Leixlip etc. will be like when its packed with bored teenagers without good public transport links and stuff to do, and if the major employers in those area exited - as wouldnt be unthinkable - whats to put the brakes on armageddon?

All the above said, I'm very pro-prosperity, the "nobody had an This post will be deleted if not edited to remove bad language in their trousers but we were all happy" type sentiment doesnt convince me.


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## daltonr (28 Jul 2005)

> If the economists an planners had had crystal balls, _perhaps_ it would have been different but none of the experts predicted the rapid economic growth that has taken place in this country.


 
The problem with that is that we are right now TODAY, repeating not just the mistakes that others have made,  We're repeating OUR OWN MISTAKES.

I agree with every single line of the original post and thank goodness someone with a voice that reaches the national media is saying it.

Nature abhors stupidity, it kills it very quickly.  So when you see one of the least populated countries in Europe having among the highest land values in Europe you need to start poking around.   Things like that dont happen by accident.

And what do you find?    Government intervention in almost every way it can intervene to keep land and house prices up,  to allow all building to happen on the developers terms leading to unnatractive, unsuitable, low quality houses.  I won't tarnish the word *home* by using it to describe what I see being built at the moment.

A simple example that I've raised before.  Let's look at two things that happen and see how they are connected.

When the government rezones a piece of land, the owner makes an extraordinary profit on the jump in value.   The land is no different than it was.   

Local government is short of cash and so is imposing levies of up to 15K on new houses.  This levy is passed on to house buyers who are already paying for the extraordinarily expnsive land that just a few weeks ago was worth a fraction of what it is now that it's rezoned.

Solution.   The government should never rezone land that it does not own.   If it wants to rezone 100acres of land it should buy it, at some small premium over agricultural value,  and then rezone it before selling it at whatever price a developer is willing to pay.   It that results in a huge profit at least it's profit for the state,  not a farmer or another developer.

Remember the government is creating the profit by the act of rezoning, surely handing that profit to private individuals is a recipe for corruption and bribery.   It's only a matter of time before the state has to pay millions to investigate corruption in the planning process.   Oh!  hang on..... I'm starting to see the bright light of an oncoming train.

This simple change that I've proposed would more than cover local authorities to provide services, or at least go a long way towards it,  removing or reducing the need for local levies, and probably reducing the overal cost of houses dramatically.   It would also all but eliminate private gain from the rezoning process, and save us all the hassle of investigating the inevitable corruption.   What still goes on despite all the investigations.   Money will always find a way.   Don't kid yourself.

Why doesn't it happen?

1. The government does not want lower house prices.   That would reduce stamp duty and possibly piss off a few voters who own houses.
2. And more importantly it would piss off FOFF (Friends of Fianna Fail), and 
    reduce the amount of donations the party generates.   E.g. 150 to 200K from the 
    tent at the Galway races alone,  mostly from builders.
3. It would Piss off Farmers


As for whether the horse has bolted and it's too late to do something.  That's irrelevant.   It's like asking if it's too late to get Joe Higgins to love Banks.   If there's no will to do something it doesn't matter how late it is,  it's never going to happen.

Would a change in government help?   I don't know.   I suppose at this stage anything is worth a try, but I have about as much hope as a snowball does in hell.

-Rd


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## Betsy Og (29 Jul 2005)

Dalton,

Just to develop your thesis a little bit further, subsequent to buying the land, why couldnt the government put the construction project out to tender. An attractive housing scheme of semi-d's with front & back grass - as the Ballymun regeneration project (with all its research & science) seems to be going for.  

There would be a construction profit for the builder, but the developers profit would be retained by government. The government would then sell the completed units at an appropriate price - involving some element of profit - and thereby deliver the affordable housing we hear so much about.

You cant expect a developer to pass up his development profit - but why not give a builder a fair construction profit. It seems the building boom will be levelling off in the next few years (e.g. McInerney looking to UK in the future) so maybe then builders would be glad of the work.

The above assumes a competent administration  - not something to be taken for granted sadly - the appointment of a value for money ministry (like in UK) would nearly be a necessary first step in this process.

And above all, make the project of decent quality - quality affordable houses for BUYERS, not badly planned crap as local authority housing, we've been down that road enough.


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## ubiquitous (29 Jul 2005)

> The government should never rezone land that it does not own.



This is a daft suggestion. If implemented you would be returning the whole process of industrial, commercial and residential development within the country to the sort of centralised bureaucracy that pertained in the old Soviet Union or now exists in Zimbabwe. Bureaucracies such as these are rarely noted for competence, forward planning, efficiency, or speed of decision-making. On a smaller scale, look at the National Roads Authority for example. Would you honestly put them in charge of housing the nation?


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## Betsy Og (29 Jul 2005)

ubiquitous said:
			
		

> This is a daft suggestion. If implemented you would be returning the whole process of industrial, commercial and residential development to the sort of centralised bureaucracy that pertained in the old Soviet Union.


 
Well in the area of housing, the government is holding a zoning "goodie bag" and is dispensing to all and sundry, apart from the taxpayer.

If the free market was really left to work there would be no such thing as zoning. So we're already into interventionist territory, rightly or wrongly, so why should the taxpayer be the exclusive loser while all other are huge winners due to this intervention.


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## ubiquitous (29 Jul 2005)

Okay Betsy, to simplify my question,

Would you honestly put the National Roads Authority in charge of housing the nation?


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## Betsy Og (29 Jul 2005)

ubiquitous said:
			
		

> Okay Betsy, to simplify my question,
> 
> Would you honestly put the National Roads Authority in charge of housing the nation?


 
Sin an ceist !!  

Like I was saying, the plan below required a good deal of administrative competence, which we're a wee bit short on in this country at the moment.


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## ubiquitous (29 Jul 2005)

at the moment?

eek!!!


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## owenm (29 Jul 2005)

ubiquitous said:
			
		

> Okay Betsy, to simplify my question,
> 
> Would you honestly put the National Roads Authority in charge of housing the nation?



No, they build roads not houses. 

Betsy is right, you don't have a true free market because of zoning and I don't think she was suggesting an NRA to build houses.


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## RainyDay (29 Jul 2005)

daltonr said:
			
		

> Solution.   The government should never rezone land that it does not own.   If it wants to rezone 100acres of land it should buy it, at some small premium over agricultural value,  and then rezone it before selling it at whatever price a developer is willing to pay.   It that results in a huge profit at least it's profit for the state,  not a farmer or another developer.
> 
> Remember the government is creating the profit by the act of rezoning, surely handing that profit to private individuals is a recipe for corruption and bribery.   It's only a matter of time before the state has to pay millions to investigate corruption in the planning process.   Oh!  hang on..... I'm starting to see the bright light of an oncoming train.


Wasn't this one of the central recommendations of the Kenny report as far back as 1972?


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