We examine the factors influencing the housing crisis in Ireland and explore effective ways to address the problem in 2017.
There has been much discussion recently about a post-truth environment and yet, as far as real estate goes, we are still in a pre-truth condition. This is because we never have all the facts, we do not fully understand and cannot predict all the consequences of policy decisions and market forces. Striving to obtain complete information to enable fully informed decision making is both impossible and essential. There is no better example of this than the Irish residential real estate market.
We have a housing crisis, with homelessness rates continuing to rise despite the economic improvements we are achieving as a country. The main real estate challenge in Ireland for 2017 is the same as that which faced us in 2016, namely housing.
Everyone wants to solve the problem, but there is no consensus on how best to do so. So what should we do?
The State needs to be more active in housebuilding. When the country had no resources in the 1930s and the 1950s local government built tens of thousands of homes. During the boom years, the private sector was left to do everything with little in the way of Government action. We can borrow at historically low rates. This will not last forever, so we need to grasp the opportunity while it still exists. After all, we mortgaged our future to bail out foreign buyers of Irish bank bonds - we should do likewise for our fellow citizens.
Market changes are helping - so let them. Recent years have seen an increased professionalisation and internationalisation of the Irish real estate market. 2017 will see private equity funds continuing to reduce their presence to be replaced by more long-term holders of real estate assets such as REITs and pension funds, both national and international. New asset classes have emerged such as student accommodation, multi-family developments and well-planned town centres. High demand for top quality hotels in key areas will mean a considerable number of transactions in the coming year. In 2016, we changed our tax law for real estate vehicles - we should not repeat that tinkering in 2017.
Proper standards, not gold plating. Poor construction leads to increased regulation, but the pendulum swung too far and failed to address major issues, such as self-certification. Some welcome changes occurred in 2015 but we need a debate about what we are trying to achieve and...