The wannabe Conor McGregor stares out the Luas window at the cut-stone walls of Grangegorman. He wears a baby-blue Adidas and Nike combo, Moncler Polo shirt (top button closed), week-old stubble, fresh skin-fade, double-swallow tattoo on the calf, and no socks. Clutching his personally engraved snooker cue, with Biggie blaring out from his chrome Beats, he is a man going places.
Beside him, a young couple – he a hirsute lumberjack, she a painted Rockabilly – clutch a Sherry Fitzgerald brochure. These are graduate refugees priced out of Portobello, contemplating a new life north of the river.
They’d better move quickly. In the chaos of another property mania, this part of the Dublin 7 house market is a key cultural frontline in the capital – another commercial battleground driven by rampant gentrification, redbrick envy, and young 550-point Leaving Cert professionals’ terror of living beyond the M50.
Phibsboro accords to the iron rule of upwardly mobile Ireland: the law of “ancient signalling”. The core principle of ancient signalling is that anything old is posh, and the older it is, the posher it is; unless, of course, it’s Scandinavian, in which case clean lines can beat archaic texture, provided there is a wood-burning stove in each spotless room.
Phibsboro is coming down with Victorian redbrick terraces, many at probate stage as an older generation of Dubliners dies out. Their families headed up the N2 during the Tiger years, and negative equity means they need to get the best price for Nan’s house. The Luas Cross-City is also playing its part in rising values here.
Names and numbers
There’s a queue out the front door for this morning’s viewing on Munster Street. The cat-who-got-the-cream estate agent is handing out cards, taking names and numbers. We are moving way past the asking price.
This one needs “a bit of work”. Such a challenge channels the inner Dermot Bannon that lies dormant within the soul of all young house-hunters. No project is too daunting. A wall knocked here, a kitchen island there, a few strategic Tom Dixon lights and you’d never know you weren’t in Ranelagh (pronounced, using the Alexandra College umlaut, “Ren”, not “Ran”).
A legion of tasteful builders, the ones with their own websites and Instagram pages, are looking at an exposed brick ‘n’ timber bonanza.
Ms 550 Points and Mr Snooker Cue might soon become neighbours, which would be a happy ending to this Saturday morning story.
But there can only be one buyer of the Munster Street house – the losers from the current scramble for property are the many who would like to buy a home in Phibsboro but can’t.
What really interests me in this vignette from Dublin 7 isn’t the residential relations but how it relates to the economy. In particular, how it relates to a concept called “site-value tax”, which many economists argue is the only long-term solution to the Irish property problem.
Henry George wrote the most successful economics book ever. Progress and Poverty was published in 1879. The book sold millions, and was quoted extensively by people as varied as Tolstoy, Churchill, and George Bernard Shaw. In the 1880s, its sales in America were second only to the Bible.
The core argument of this book is that land should be taxed heavily because the value of land is made not by the owners but by its location. The location is made valuable by other people.
Land-owners enjoy unearned income that is generated by great transport links and proximity to customers and businesses. Therefore, the site value of the land is not generated by the landowner but by society in general.
George argued that increases in the value of sites should be taxed and taxed heavily – so much so that countries could replace income tax with land taxes. It is a truly compelling and egalitarian idea and, unlike other taxes, it wouldn’t lead to capital flight or to people working less.
In fact, if implemented properly, it would address dereliction and liberate millions of income tax payers from the heavy burden of excessive income tax.
Take, for instance, the example of the new Luas and house prices and rents in the Phibsboro area. House values, commercial land values, and rents have increased substantially with the help of public investment in the new Luas system.
Who paid for this? You did. Who benefits from this? The lucky local landowner does. What did he or she do for this windfall? Nothing.
So this is a transfer of wealth from the general population through taxation and public investment to the individual in rocketing land prices.
If this unearned windfall were taxed with a site-value tax or a location fee, the impact would be dramatic and the logic would be fair. It is also much fairer than property tax as it doesn’t penalise people for renovations they make. Think of all those aspiring Dermot Bannons.
It would undermine the stranglehold the property lobby has on Irish economics, help reduce land speculation and hoarding, and penalise the dereliction that has blighted our cities as property owners hoard land, waiting for prices to rise.
All areas of the capital city and its suburbs would be covered by a “location fee” because land values are driven up by other people, not the landowner. This is why you never see giant shopping centres like Dundrum built in the middle of the countryside.
The value of the Dundrum site is the people and businesses located nearby, the M50 access, the buses, and the Luas. Why should the owner of the land get all the upside when you the taxpayer and the citizen creates the value? The shops would still trade, but their rents would be much lower, so prices would be lower too.
As we face another housing crisis, surely new thinking isn’t beyond us?