Ireland needs a major housing reset and this will discommode many. It has to

Now that the election is out of the way, it’s time to get serious about housing. Ireland needs a major housing reset and this will discommode many. It has to. Otherwise there will never be real social or generational peace, emigration of young Irish people will continue and the average person’s lifestyle will not be commensurate with their incomes. We will remain a rich country that feels like a poor one.

After all, the objective of economic prosperity is to improve the day-to-day life of the citizen. That’s the name of the game. This means dramatic changes to planning and financing of homes, plus an equally significant and rapid change to planning and transport policy. More than anything, the pace of development has to accelerate and this implies smashing the system that upholds individual “rights” over communal needs.

Ireland is not alone in experiencing a housing crisis. Compared with our continental neighbours, anglophone countries can’t seem to build enough homes – at any price – quickly in places where people want to live. In this sense, much as we might like to see ourselves as unique, Ireland is not exceptional. All English-speaking countries have similar housing problems. Common denominators include common law and an attitude to seeing housing as an investment, but this is not all. First, let’s look at the facts.

In the past 40 years, the housing stock of English-speaking countries has faltered. In the 1980s, both anglophone and European economies had about 400 homes per 1,000 residents. Since then, there has been a significant divergence, with the anglophones largely stagnating while the Europeans have surged ahead to about 560 homes per 1,000 residents.

And, not surprisingly, as supply has fallen behind population increases, prices have risen more quickly and further in the anglosphere countries since the housing/banking crash of 2008. Irish house prices are now 85 per cent above where they were in 2012, and a similar but not quite so disastrous trend has been experienced in all English-speaking countries. In contrast, house prices in Italy have fallen by 12 per cent since 2012.

Some people put the development of property prices down to cultural factors such as Irish people wanting to own their own homes with gardens, because we have a historical attachment to land and a legacy fear of eviction. Karl Marx was certainly interested in the central role of landlord-tenant relations in the Irish psyche when he wrote: “The domination over Ireland at present amounts to collecting rent for the English aristocracy.” But Irish cultural exceptionalism doesn’t explain why we see such strikingly similar failings in the UK, the US and other anglophone countries.

All English-speaking countries share a certain cultural inclination towards home ownership and an aversion towards dense, communal living, evidenced by a notably lower share of apartments and relatively less dense urban cores. For example, only 9 per cent of Irish people live in apartments, compared with 66 per cent of Spanish people. On average 45 per cent of all OECD residents live in apartments. Ireland is a massive outlier. This has to change and change quickly.

A lack of apartment living is also related to home ownership rates as opposed to rental rates. The home ownership rate in Ireland was 71 per cent in 1971, rising to a peak of 80 per cent in 1991. Since then, the figure has fallen to 66 per cent, but is still far above countries such as Switzerland, where six out of 10 people rent their homes. Obviously a bias away from dense living, allied to a preference for home ownership, not only puts upward pressure on housing costs and thus prices, but as more people are feeling richer as a result of prices rises, politically lots of people want house prices to rise.

In short, the day before you buy your first home you want house prices to fall; the day after you buy you want them to rise.

So, how does a society with such a housing legacy break this cycle or upward prices begetting upward prices, enmeshing a dysfunctional housing market into the economy as if there is nothing we can do about it? We change the system by rapid cultural change, which will involve altering everything from the planning system to the legal and financial system.

An example of a country that has done this is Japan. In the late 1980s, Japan experienced one of the most dramatic housing boom/bust cycles in history. It was then thought that the Japanese were a nation of homeowners whose wealth was tied to housing, and that this wouldn’t change as it was somehow cultural.

Today Japan has the envious reputation of the country with the most efficient housing market, modest price growth and an ability to replace buildings at a rate unmatched anywhere. Japan loosened up its planning laws so much so that whereas our planning and zoning laws tell you what you can build, Japanese zoning identifies what you can’t build and lets you get on with everything else. This means that Japanese districts have an organic, almost higgledy-piggledy feel to them, but they are diverse, dense and thriving.

As a result, the city of Tokyo had 13.5 million residents in 2018, and it built 145,000 new residences that year. Whereas London with a population of about 10 million, built 38,000 homes last year. This shows you the scale of the problem.

Tokyo’s accomplishment is all the more impressive because there is so little land available, so practically every one of those 145,000 homes was tucked into an existing neighbourhood. In Japan, the councils have precedence on land that they want for transport infrastructure, their zoning regulations encourage rather than dissuade building, minimal individual opposition is entertained and they replace buildings every 20-odd years, meaning the housing market adapts quickly to the population’s changing needs.

We need this type of root-and-branch change to how we see urban development.

One major difference between Japan and the anglophone countries is that Japan doesn’t have much immigration and immigrants obviously put upward pressure on demand: they too need roofs over their heads. However, it is easy to blame immigrants; even if Ireland introduced a total ban on immigration tomorrow, Ireland would still need to be building tens of thousands of homes every year for decades owing to i) existing undersupply and ii) changing household size, building obsolescence, divorces and our own natural increase in the population.

So while immigration is putting extra upward pressure on rents and prices, blaming immigrants alone lets the entire dysfunctional system off the hook by projecting its own failures on to the foreigners, who are far more likely to work in construction than locals and are therefore the very people who will build the new houses anyway. In the US, immigrants account for 34 per cent of those who worked in construction in 2023, far higher than their 18 per cent share of the overall workforce. They may be part of the problem but they are definitely part of the solution too.

Ireland needs to get serious about planning, housing, zoning and transport. Just to keep up with present demand, we require to build a city the size of Waterford every year for decades. That demands a level of seriousness and integration yet unseen in Irish policymaking. Maybe a new government with a new mandate and an obsessive focus is just what we need.