Dublin, Local Government, Department of the Environment, Ireland, Central Statistics Office, local authorities, Stationery Office, development, cent, affordability, planning system, Bacon and Associates, residential development, affordable housing, spatial development strategy, Journal of Irish Urban Studies, Department of the Environment and Local Government, housing affordability, Housing Unit, Michelle Norris, Republic of Ireland, European Union, greater Dublin area, development plans, planning schools, regional development, Norris, Dublin Area, North Dublin, University College Dublin, Social Housing, Dublin Regional Authority, National Economic and Social Council, Housing Supply, Housing Policy Review, Private Sector, B Shiels, mortgage payments, National Economic and Social Forum, North Dublin Development Coalition
Housing Affordability Problems in the Republic of Ireland: Is Planning the Cause or Cure? Michelle Norris and Patrick Shiels*, The Housing Unit Correspondence to: Michelle Norris, The Housing Unit, Canal House Canal Road, Dublin 6 Republic of Ireland. Tel: +353-1-4966377 E-mail: [email protected]
*: the views expressed in this paper are those of the authors and do not necessarily reflect those of the Housing Unit board, consultative committee or funding organisations.
Housing Affordability Problems in the Republic of Ireland: Is Planning the Cause or Cure? The arrival off strong economic growth and falling unemployment in Ireland in the mid 1990s, drove population growth, and rising demand for housing which in turn effected rising house prices and rents. This article reviews the evidence regarding housing affordability in Ireland over the last decade, together with government assessments of and responses to this evidence. It subsequently examines the impact of the Ireland's relatively laissez-faire land use planning system on housing affordability and concludes that it has not constrained housing output nationally. Indeed Ireland's house building rate, which is among the highest in the EU, has probably helped to curtail price inflation. However, failure to actively and strategically manage this new supply, coupled with the distorting effects of fiscal policy, means that it has not been delivered in the locations where affordability problems are greatest or to the households in greatest need. Finally, the article assesses the potential of recent planning reforms intended to manage supply more effectively and to confer planning with a more direct role in addressing affordability problems by using planning gain to deliver housing for sale and rent to low income households. Key words: Ireland, Planning, Housing Affordability. Introduction. The period since the mid 1990s is distinguished by a dramatic change in the Republic of Ireland's economic fortunes, as a decade long recession, was replaced by strong growth in Gross Domestic Product (GDP) per capita which increased from one third below the European Union
(EU) average in 1990, to 10 per cent above in 2000 and falling unemployment which decreased from 13.4 per cent to 4.2 per cent over the same period (European Union, 2002). These economic development
s contributed to equally dramatic demographic change. Between 1991 and 2002 the population increase
d by 11 per cent and the number of households expanded by 258,958 (Central
Statistics Office, 2003). Thus marking the end of a century-long trend of falling or stagnating population (Garvin 2004). Not surprisingly these economic and demographic developments led to a strong increase in housing demand. Moreover, this demand was further stimulated by cuts in income and other direct taxes; the liberalisation of the mortgage lending market and falling interest rates (Fahey and Maоtre, 2004). However, the supply response was encumbered by the relative paucity of the Irish housing stock the number of dwellings per 1,000 inhabitants was only 391 in 2003, compared with 422.3 among all 25 current EU Member States
(Norris and Shiels, 2004). As a result, the traditional pattern of low and steady rate of residential property price and rent inflation ceased. House prices increased by 251 per cent between 1996 and 2002 and private rent inflation jumped from 3 per cent per annum between 1990 and 1996 to 14.6 per cent in 2000/2001. In the social housing sector these developments brought an end to falling demand and the number of households qualified for this housing grew by 20,986 between 1996 and 2002 (Norris and Winston, 2004). This article, reviews the available evidence regarding trends in housing affordability in Ireland since the mid 1990s, together with the policies introduced by government in response. On the basis of this evidence, together with the results of several empirical studies conducted by the authors, the contribution of the Irish land use planning system to housing affordability problems is assessed (Norris, 2005; Williams et al, 2002). Recent years have seen a number of reforms to planning in Ireland, intended to remove the impediments to expediting housing output, and also to afford it a more direct role in addressing housing affordability problems by using planning gain to
deliver housing for rent and sale to low income households. The potential of these measures is examined in the latter half of the article. Evidence and Interventions. The available information regarding the affordability implications of the rises in house prices, private residential rents and social housing waiting lists, mentioned above, is set out in Figure 1. In view of the calamitous tone of much of the media coverage and some of the academic commentary (for instance: National Economic and Social Forum, 2000) on housing affordability, some of the trends revealed in this graph are rather unexpected. For instance, Figure 1 demonstrates that, among the 6.9 per cent of households who are currently local authority tenants, the proportion of expenditure devoted to rent has remained consistently low since 1973, at 7.6 per cent (Central Statistics Office, 2004). This is because the rents of local authority dwellings (which accommodate 90 per cent of social renting households) vary according to tenants' incomes (see: Clarke and Norris, 2001). In contrast, the proportion of household expenditure which private sector tenants devote to rent increased dramatically from 12.5 per cent in 1987 to 21 per cent in 1999/2000. Research by Fahey et al (2004) confirms that this has led to affordability problems. They found that 19 per cent of private renting tenants had incomes below 60 per cent of the national median in 2000, but that when housing
costs are subtracted from income, this rises to 27.5 per cent. Figure 1 reveals static proportionate housing expenditure among the small majority (51 per cent) of Irish home owners who have a mortgage and Fahey et al (2004) further substantiate the lack of widespread affordability difficulties among this group (Central Statistics Office, 2003). They report that 11.4 per cent of mortgagors had incomes below 60 per cent of the median in 2000, but this rises to only 13 per cent when housing costs are taken into account. This trend is due the fact that the strong house price inflation mentioned above, was counterbalanced by a combination of rising disposable incomes, coupled with falling housing costs among this cohort due to interest rate reductions, which more than halved in real terms during the 1990s (European Union, 2002). However, more detailed analysis reveals an important caveat to this finding regarding the general affordability of owner occupation. Figure 2 reveals that, the proportion of a `typical' household income
required to service a mortgage on 90 per cent of the cost (normally the maximum loan advanced) of an average priced new home is significantly higher in Dublin than in the rest of the country. This is due to higher house price inflation in the Capital where prices rose by 266.9 per cent between 1996 and 2002, compared to 236 per cent countrywide. As a result of parallel trends in private residential rent inflation this pattern of regional affordability variations is mirrored in this sector. In Dublin, 26 per cent of private renting households had rent burdens which exceed 35 per cent of income in 2000, compared to only 12 per cent of their rural counterparts (Fahey et al, 2004).
In addition, a recent report by the government's policy advisory body the National Economic and Social Council (NESC) (2004), argues that the combination of rising house purchase costs and private rent inflation have created serious difficulties for households seeking to access home ownership, particularly in Dublin Thus NESC points out that to accumulate the 10 per cent deposit required to purchase the average new house in 2003, an individual must save 100 per cent of the net annual average industrial wage (rising to 130 per cent in Dublin), whereas in 1989 the equivalent transaction would have required only 62 per cent of net earnings. The fact that the proportion of householders who own their homes fell, by 2.8 per cent between 1991 and 2002, also corroborates this analysis (Central Statistics Office, 2004). The changes in housing accessibility and affordability outlined above, propelled housing from the lower levels of the political agenda in the first half of the 1990s, to the very top by the end of the decade. Housing was not mentioned in the two key economic policy statements published during the early 1990s (the 1989 and 1993 National Development Plans); nor was it identified as a target in the National AntiPoverty Strategy (the key contemporary social policy statement); nor addressed in the Partnership 2000 agreement negotiated in 1996 between government, employers and other `social partners' under Ireland's corporatist policy making system (Government of Ireland, 1989, 1993, 1997, 1996; Allen, 2000). Whereas the updated versions of these documents, published in the late 1990s, all identified housing as a central issue (Government of Ireland, 2000a, 2000b; Department of Social Community and Family Affairs, 2002). Moreover the pace of housing policy development quickened. The ministry with responsibility for housing the Department of the Environment, Heritage and Local Government (DoEHLG) only published two housing policy
statements between 1990 and 1996, compared to eight since the latter year (Department of the Environment, 1991, 1995; Housing Management Group, 1996, 1998; Commission on the Private Rented Residential Sector, 2000; Department of the Environment and Local Government, 1998, 1999a, 2000a, 2000b, 2002a). From the perspective of the discussion at hand the most significant features of the housing policy initiatives
announced in these various documents are as follows. The affordability problem is defined principally in terms of access to home ownership the DoEHLG published three statements on this issue in the late 1990s, in response to three reviews of the housing market commissioned from Peter Bacon and Associates (Department of the Environment and Local Government, 1998, 1999a, 2000a; Bacon and Associates, 1998, 1999, 2000). In contrast, despite the affordability problems among private renters highlighted above, the DoEHLG's Commission on the Private Rented Residential Sector (2000) advised against intervention by government to reduce market rents. As is evidenced by the interventions proposed in the aforementioned DoEHLG statements on housing affordability, the solution to this problem was defined as expanding housing supply, by increasing new building. Apart from relatively minor reforms, little effort was made to manage demand for house purchase (Norris and Winston, 2004). Indeed several new fiscal stimulants of housing demand have been introduced in recent years. A range of targeted interventions to enable low and moderate income households to purchase a home were also introduced and social housing output increased.
The vast majority of the housing affordability measures were national programmes, with relatively minor variations in their terms to reflect local or regional differences. Planning Causes The Local Government (Planning and Development) Act, 1963, which established Ireland's land use planning system, was closely modelled on the UK Town and Country Planning Act, 1947. Like its UK counterpart, the 1963 Act obliged local authorities to specify their spatial development proposals in development plans of at least five years duration (Bannon, (ed) 1989). Plans for urban areas, should designate land for residential, commercial, industrial, institutional and amenity use and make provision for necessary infrastructure such as roads. Adherence to the development plan is controlled by means of planning permissions. However, compared to the UK, development control procedures have been applied much more liberally in Ireland, as has the development planning process. Many rural local authorities did not regularly revise their development plans until the 1980s (Bannon, (ed), 1989). In addition, the 1963 Act did not require development plans to estimate and make provision for meeting future housing needs, or to specify the appropriate design and density of dwellings. According to Meehan (2003: 65-66) most plans made only `.... limited quantitative assessment of demand for housing', and specified `... maximum but relatively low [housing] densities (generally in the region of 6-10 per acre), but did
not address the design/form of housing'. In addition, the Irish planning system, is characterised by a virtual absence of strategic regional or national planning. Although a national spatial plan was published in 1968, as were strategies for the Dublin and Eastern Regions in 1967 and 1985 respectively, the first two of these were implemented only in part, and the third was not implemented at all (Bannon (ed), 1989). Apart from the establishment of an independent planning appeals body - An Bord Pleanбla, in 1977, no significant changes were made to the planning system established by the 1963 Act, until it was superseded by a new principal planning act in 2000 (Meehan 2003). Figure 3 sketches new house building trends in the Republic of Ireland from the foundation of the State in 1922 until 2000. It reveals relatively low housing output in the period to 1969, particularly by the private sector, consequently local authority built social housing accounted for a large share of total output. However, since 1994, this pattern has sharply reversed and housing production almost trebled in volume compared to the previous decade, to 57,695 units in 2002, most of which were built by the private sector (Department of the Environment, Heritage and Local Government, various years). This constitutes 14.73 units per 1,000 inhabitants, which is one of the highest housing output levels in the European Union, and substantially ahead of the average for all 25 EU members (4.25 per 1,000) (Norris and Shiels, 2004). As a result, over 20 per cent of the existing Irish housing stock was built between 1994 and 2001 (Williams and Shiels, 2002). Chesire (2004), among others (for instance: Evans, 1987; Monk, et al, 1996), argues that the emphasis which the UK planning system places on limiting the expansion of
urban areas, which also constrains the supply of development land, is the primary cause of the relatively low housing output in this country and ultimately of the strong house price inflation in real terms since 1960, which in turn has led to problems of housing affordability and price volatility. Figure 3 substantiates this analysis because it reveals that private housing output in Ireland has historically been more responsive to changes in demand than the UK, which indicates that the more liberal planning system employed in the former country has not produced the housing supply and affordability problems evident in the latter. The relatively low level of private house building in Ireland until the 1970s reflects the economic and population stagnation mentioned above, coupled with the underdevelopment of the commercial mortgage lending market. Housing demand increased in the 1970s due to a short period of economic and population growth and output expanded accordingly, but it stagnated in the 1980s when demand was softened by prolonged recession and emigration (Kennedy et al, 1988). Trends in housing prices provide further evidence of housing market equilibrium during this period. In real terms, Irish house prices were only marginally higher in the late 1980s than in the early 1970s (Fahey et al, 2004). Although this inflation pattern has changed dramatically since the mid 1990s, the available evidence does not indicate that new house building and, by extension, the planning system, is a significant contributory factor. On examination of a number of econometric models of Irish housing output, NESC (2004: 43) concludes that `... the initial rise in house completions [in the late 1990s] were less than would be expected given the higher prices, but... private house completions are now in line with or possibly ahead of what would be expected given the fundamentals'. The factors which have
precipitated continued house price inflation, despite this over-supply, are examined in the conclusions to this article. The lack of planning causes of housing affordability problems at the national level in Ireland, does not mean that the system is entirely unproblematic. For instance there is evidence that liberal planning has sacrificed housing quality in the interests of quantity. McDonald (2000) argues that until recently, planned residential development has consisted largely of low-density, monotonous housing estates on the peripheries of towns and cities
. In addition a significant proportion of the recent housing output consists of single-family houses in the open countryside. In 1999, 47.4 per cent of output in rural local authorities areas was in this category, and concerns have been raised about the aesthetics and sustainability of this type of housing (Department of the Environment and Local Government, 2002c; McGrath, 1998). More significantly, from the perspective of the discussion at hand, the increase in housing output since the mid 1990s, has not been evenly distributed around the country. As Figure 4 demonstrates, housing output in Dublin city and suburbs, lagged far behind the rest of Ireland between 1994 and 2003, indeed the size of gap has grown over this period. To contextualise this trend, Dublin accounted for 28.7 per cent of the Irish population
in 2002 but only 22.3 per cent of the total national housing output between 1994 and 2003 (Central Statistics Office, 2003; Department of the Environment, Heritage and Local Government, various years). NESC (2004) identifies under supply as the primary cause of the housing affordability problems in Dublin, highlighted earlier in this article. Furthermore as Figure 4 reveals, lack of
output in Dublin, has deflected housing demand to the greater Dublin area, causing extensive output in a greatly expanded commuter belt, which has placed significant strain on local services and the built environment (Williams and Shiels, 2000). Research conducted by one of the authors, which comprised analysis of house price, output and population data, coupled with in-depth interviews with key public and private
sector actors in the housing development field in Dublin, indicates that the planning system is an important (but not the sole) contributor to this regional supply imbalance (Williams, et al, 2002). Six aspects of this system have been particularly influential in this regard. Firstly, the shortage of suitably qualified planning staff in local authorities has been an impediment to expediting housing output in the country as a whole (Department of the Environment and Local Government, 2001). However, like many other parts of the public service, recruiting such staff has proved particularly problematic in Dublin, because of the higher cost of living. A second contributory factor relates to the highly centralised funding system for Irish local authorities coupled with the aforementioned shortcomings in development planning. Bacon and Associates (1998) identified inadequate water, sewerage and road infrastructure as a key impediment realising housing output on zoned land in Dublin, and since central government meets most land servicing costs, recommended it should substantially increase its funding to rectify this. In contrast, serviced land is not necessary to enable the extensive development of single houses in the countryside, mentioned earlier.
Thirdly, the predominance of low density housing development in Dublin until the late 1990s was an inefficient use of scarce urban land which could have been employed to deliver many more dwellings, built at higher densities. In addition, pressure on local authority councillors from resident's associations; landowners and the development industry, regarding zoning decisions was identified by many interviewees as critical in the planning process. In existing urban areas, this pressure usually restricts housing supply (as the wishes of existing residents are the key political consideration), whilst in peripheral areas (where land owners are more influential) it often facilitates the zoning of land to enable green-field development. In Dublin there have also been delays in servicing lands, which were rezoned by politicians against the advice of local authority planners, due to the engineering and drainage work required (Williams, et al, 2002). A larger range of criteria must be taken into account in urban planning decisions; these decisions potentially impact on more people so any consultation required is lengthier and there are a larger number of potential objectors to planning applications. As a result of the last of these factors, there is an average two year time lag between the granting of planning permissions by Dublin local authorities, and the commencement of construction (Williams and Shiels, 2001). Finally, the paucity of regional and national land use planning, and absence of political will to implement the plans which have been formulated, has created a number of problems. A regional housing strategy for the greater Dublin area would probably have identified the abovementioned infrastructural barriers to house building, at an earlier stage, since many of these traverse local authority boundaries. In addition, for over thirty years following the publication of the
(only partially implemented) Bucannan report in 1968, Ireland lacked a national spatial development strategy. For decades, the most serious result of this omission was rural population decline. However, following the economic boom of mid 1990s, the failure to promote alternative growth centres meant that industry, jobs and therefore, households were drawn magnetically to Dublin, as the only city with the population and infrastructure to support it. The resultant growth in regional housing demand made house price inflation almost inevitable (National Economic and Social Council, 2004).
Planning Cures Over the last four years a range of reforms have been made to the Irish planning system to address the planning related causes of housing affordability outlined above. These initiatives have has mixed success. Although it is important to stress that, due to their recent establishment, the assessment of their achievements presented here is very preliminary. A number of relevant recent planning reforms have been introduced by the DoEHLG in response to the housing market analyses commissioned from Bacon and Associates (1998, 1999, 2000). Broadly speaking, the least complex of these initiatives have been most successful. For instance, funding for the Serviced Land Initiative, which finances the water, sewerage and road infrastructure necessary to release land for residential development, was more than doubled to 47.8m per annum, 38 per cent of which was reserved for Dublin (Department of the Environment and Local Government, 1998). MacCabe (2003) reports that measure has surpassed its target between 2001 and 2003 sites for 43,449 dwellings were serviced under its auspices in Dublin. The DoEHLG also published new Residential Density Guidelines for Planning Authorities, which recommended the doubling of densities in suburban areas (Department Of the Environment And Local Government, 1999b). These guidelines appear to have had an impact - the proportion of new dwellings in Dublin which are terraced houses or apartments rose by 50 per cent between 1992 and 2002 - although land price inflation may also have been an influential factor in this regard (Department of the Environment, Heritage and Local Government, various years).
More importantly, from the perspective of the discussion at hand, this increase in densities contributed to the increase in housing output in Dublin since 2000, which is highlighted in Figure 4, above. In addition, extra resources were provided to enable An Bord Pleanбla employ additional staff in order to process planning appeals more swiftly and to allow planning schools increase their student numbers and consequently graduate output has grown significantly (Department of the Environment and Local Government, 2001). Both of these measures appear to have reaped some benefits. The disappointing achievements of some of the other planning reforms recommended by Bacon and Associates (1998, 1999, 2000) largely reflects the complexity and politicised nature of the interventions in question. Strategic Development Zones (SDZs) are an example of the former problem. This measure was originally introduced to `fast track' the provision of critical infrastructure such as power stations, that may otherwise been held up in the traditional planning process by local opposition, but Bacon and Associates' (1998) suggested it should be extended to include housing. Three housing SDZs were designated in 2000 two in Dublin and one in the Greater Dublin Area. However, to date development has commenced on one of these. This site, at Adamstown in West Dublin, has taken almost four years from designation to the commencement of development, due to the length of time required to determine its layout in detail and to provide the key amenities required before housing development occurs. The latter task is particularly challenging in Ireland because responsibility for the provision of main roads, railways and schools lies, not with local authorities, but with a plethora of other agencies (Williams et al., 2002).
Bacon and Associates' 1999 report also recommended that a national spatial development strategy be formulated to balance the distribution of population and economic activity across the country, and affect an even geographical distribution of housing demand away from Dublin. A National Spatial Strategy was subsequently published, covering the period until 2002-2020 (Department of the Environment and Local Government, 2002b). It aims to achieve balanced regional development by designating of a number of cities and towns as `gateways' (engines of regional and national growth), toward which investment infrastructure, services and amenities is to be directed. Garvin (2004) provides a fascinating account of how the implementation of Ireland's only previous attempt at national spatial planning in 1968, was scuppered by the overwhelming localism of Irish politics, which renders positive discrimination in favour of one locality, over another, practically impossible. The indications are the continued influence of this factor will condemn the National Spatial Strategy, 20022020 to a similar fate. For instance, Scott (2005: 9) argues `Undoubtedly the designation of gateways was underpinned by political pragmatism', as a result of which he questions whether some gateways `... have the critical mass to secure balanced regional development' and suggests that `... the number of gateways designated (eight in total) may prove too many in a small economy to effectively develop clusters of economic growth.... needed to counterbalance the dominance of ... Dublin'. More fundamentally, local interests are likely to undermine the implementation of the strategy, which is to achieved by means of regional planning guidelines prepared by eight regional authorities. Guidelines for the greater Dublin area were published in 1999 (Brady Shipman Martin, et al, 1999). However these have been largely ignored in the development plans published by local authorities in
the greater Dublin area, which have rezoned land for housing far in excess of the guidelines' recommendation. Legal challenge to one of these development plans in question, on the grounds of their failure to reflect the regional guidelines, was unsuccessful because the law only requires local authorities to `have regard to' this document (Simons, 2003). Apart from the measures described above, the other key recent reforms to the Irish planning system are legislated for in the Planning and Development Act, 2000. Part V of the Act obliges local authorities to amend their development plans to incorporate housing strategies which detail how future local housing demand will be met. These strategies must estimate the need for social rented housing, and for `affordable housing' which, in the Irish context, refers specifically to dwellings for sale, at below market value to low income households. To satisfy this social and affordable housing need, local authorities may employ up to 20 per cent of land zoned for residential development locally. Property developers must transfer the necessary proportion of dwellings, land or sites to local authorities as a condition of planning permission. In return they are compensated at the level of the existing use value (in the case of land), plus development costs (in the case of sites), plus reasonable profit (in the case of houses). The 2000 Act also specifies that housing strategies should take account of the need to counteract undue social segregation in housing between people of different social backgrounds. DoEHLG guidelines recommend that this should be achieved by tenure mixing in estates and ensuring all dwellings are similar in design (Department of the Environment and Local Government, 2000c).
Not surprisingly, these arrangements attracted considerable opposition particularly from representatives of the construction industry who argued that they alienate homebuyers; reduce housing supply, and increase prices (for instance: Irish Home Builders Association, 1999). Consequently the amending legislation was enacted in 2002 which provides developers with alternative options for meeting their Part V commitments, including: providing cash compensation and/or dwellings, land or housing sites in an alternative location (Department of the Environment, Heritage and Local Government, 2003). The available evidence indicates that the broad thrust of the reforms introduced by Part V were necessary to address affordability difficulties and expedite supply in appropriate locations. However, the implementation of these provisions has proved challenging. The formulation of housing strategies should logically lead to better planning of future housing provision, than the previous system whereby only minimalist efforts were made to quantify need (Meehan, 2003). However, local authorities have faced difficulties in accessing the data necessary to make these estimates. Consequently concerns have been raised that the strategies overstate social and affordable housing need, particularly in rural areas (Threshold, 2002). Research by one of the authors, incorporating a survey of the number and characteristics of mixed tenure estates built prior to 2003, coupled with case studies of five existing mixed tenure estates, concludes that Part V was has necessary to ensure adequate supply of social and affordable housing in urban areas where land prices are
highest and affordability problems greatest (Norris, 2005). In addition, the tenure mixing provisions were required to prevent the development of more large-scale concentrations of social housing in urban areas. The available evidence indicates that Part V has had limited impact on total housing output. Interviews with home buyers in five mixed tenure estates, carried out as part of the abovementioned study, uncovered very little opposition to tenure mixing, and housing output has increased in the years since the legislation was introduced (Norris, 2004). Williams et al (2002) argue that the absence of co-ordination between the housing strategies in the greater Dublin area, has the potential to distort housing output in favour of the counties surrounding the city, where the Part V provisions are less demanding. The 2003 and 2004 house building statistics do flag some trends of this type (Department of the Environment, Heritage and Local Government, various years). Although these data could also be plausibly interpreted as a continuation of the longstanding centrifugal development pattern in Dublin revealed in Figure 4. Its also possible that the lack of impact of Part V on total housing output is the result of low number of social and affordable units delivered under its auspices which totalled 800 dwellings by the end of 2004. This output rate is probably related to the fact that many dwellings currently being completed are subject to planning permission granted prior to the 2000 Act. At the end of 2004 1,910 social and affordable units were in the course of acquisition under Part V and agreements were in negotiation regarding the acquisition of further 2,885 dwellings. Although there is also evidence that rural local authorities favour accepting monetary compensations from developers, rather than insisting on the transfer of dwellings. Payments of this type totalled 7.3
million (0.4 per cent of the State's housing capital programme) in 2004. In contrast Dublin local authorities appear to favour the transfer of dwellings. 70 per cent of the social and affordable housing delivered under Part V in 2004 are in Dublin (Department of the Environment, Heritage and Local Government, various years). If this measure continues to be implemented in this way, it is likely to have a significant impact on housing affordability problems in the Capital, outlined above. As mentioned above, the implementation of Part V has raised challenges however. Developers interviewed for the aforementioned research, complained that the negotiation of Part V agreements prior to the granting of planning permission, slows the development process. While social landlords were concerned that, appropriate social housing design would be more difficult to achieve through the Part V mechanism. However the research concluded that many of these problems could be resolved by relatively simple measures such as the provision of detailed guidance for developers (Norris, 2005). The management of most mixed-tenure estates is not problematic, but high-density developments are an exception. Meeting the fees charged by the agents employed to manage such developments proved problematic for social landlords, in view of the revenue constraints created by the income related social housing system.
Concluding Comments Ireland's relatively permissive planning arrangements have not has significant consequences for housing affordability over the last decade, because this system has not constrained output, which is reflected in an elastic supply response to rising demand in recent years. Between 1998 and 2003, housing output exceeded new household formation by fifty per cent (National Economic and Social Council, 2004). The foregoing analysis has revealed Dublin as an exception in this regard, however. Delays associated with the capacity of the planning system and the influence of local politics has impeded output and has contributed to high house price inflation in the city. The measures introduced to address these planning impediments to expediting housing output have had mixed success. Although space limitations do not permit in depth analysis of this issue, it is important to mention that the distinctive fiscal treatment of housing in Ireland has also influenced the patterns of housing supply and affordability described in this article. Area-based tax incentives for the construction of holiday homes in seaside resorts and private rented accommodation in designated rural areas, towns and villages; coupled with the lack of property taxes in Ireland and the relatively low taxes levied on the purchase of new housing, particularly self-build housing, have led to excess output of new houses for use as holiday homes, or tax shelters, which are often left vacant, particularly in the western seaboard (Fitzgerald, 2005). This distortion of housing supply towards vacant dwellings, obviously does not meet housing needs, but more crucially may have diverted constrained construction resources away from Dublin
where demand was greatest. In addition, this demand for vacant or second homes has fuelled house price inflation. Fitz Gearld et al (2003) calculate that the increase in vacant dwellings between 2000 and 2003 added between 15 and 20 per cent to house prices over this period. The regional concentration of vacant dwellings in the West would therefore have inflated the local housing market by significantly more than this.
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Figure 1: Weekly rent and mortgage payments as a percentage of total household expenditure, 1973-2000
Per cent of household expenditure
Owners with mortgage
Local authority renters
Source: Central Statistics Office (1977, 1984, 1989, 1997, 2001).
Figure 2: Mortgage payments on 90 per cent of the cost of an average priced new house as a percentage of net income for `typical' first time buyer households, 1988-2002
34.9 35.8 34.0
Per cent of household income
Source: Norris and Winston (2004). Note: Data refer to two earner, married households (assessed jointly for tax purposes), whose income consists of the average industrial wage, plus the average non-industrial wage. Mortgage payments are assumed to be a 20 year mortgage for 90 per cent of the average new house price for that year, repaid at average mortgage rates for that year.
Figure 3: Dwellings Built by the Private Sector and Local Authorities, 1920s 1990s
176230 185506 275186
6920 10910 38450 31657 20768 37164 52500 49,188 29124 64835 61953 42192 20184
Source Minister for Local Government (1964) and Department of the Environment, Heritage and Local Government (Various Years). Note: The 1920s refer to 19231929 only; private sector building figures from the 1920s to the 1950s only include dwellings built with State aid, but the available evidence indicates that this includes the vast majority of private sector dwellings built.
Figure 4: Housing Output in Dublin, the Greater Dublin Area and the Rest of Ireland, 1994-2002
50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0
7891 8823 9446 9323 8957
2870 3588 4222 4562 5266 1994 1995 1996 1997 1998 Greater Dublin Area
1999 2000 2001 2002
Rest of Ireland
Source: Department of the Environment, Heritage and Local Government (Various Years). Note: Dublin includes the operational areas of Dublin City Council and Fingal, South Dublin and Dun Laoghaire-Rathdown County Councils. The Greater Dublin Area consists of the Meath, Kildare and Wicklow County Council operational areas.