Housing systems & electoral politics
The Week in Housing 06/10/23
I’ve had lots of new subscribers to the Newsletter since publishing my latest RTE Brainstorm piece. Thanks to all the new subscribers for your interest. Just to note that at the moment the Newsletter is coming out fortnightly (every other Friday at 9am).
Some time ago I recommended the recently published The Political Economy of Housing Financialization, by Gregory Fuller. It’s a great book in general, but one of the chapters will be particularly interesting to Irish readers as we move ever closer to the next general election. The author argues that the nature of housing systems has significant implications for the types of policies that political parties espouse. In particular, he analyses the kinds of political and policy outcomes that arise from heavily ‘financialized’ and ‘commodified’ housing systems (such as Ireland’s). Given housing policy is likely to be front and centre come election time, it’s interesting to think about how housing policy in Ireland is shaped by the nature of our housing system.
Fuller begins with a useful definition of housing financialization:
“Commodification refers to the process of valuing and allocating a thing – in this case houses – through a market of some sort. Financialization, for the purposes of the housing discussion, is a type of commodification wherein the exchange of houses becomes dependent on the exchange of financial products,”
He then categories European countries based on this definition. He has four main categories: Ango-Dutch Liberalism (Ireland, UK, Netherlands); Scandinavian Financialization (Denmark, Sweden, Norway); the Continental Middle (France, Germany, Belgium, Austria, Finland, Spain and Portugal); Southern Traditionalists (Italy, Greece); Post-Communist (Central and Eastern Europe).
The Anglo-Dutch group, which includes Ireland, is defined as follows:
“Anglo-Dutch housing systems are characterized by the extremely intensive use of mortgages and mortgage derivatives. Access to homeownership is typically more limited than in other systems where housing is … distributed by governments or passed through families. Furthermore, these systems allow people to remove equity from their homes fairly easily.... Social housing programmes are de-emphasized… with a focus on encouraging privatized housing for the vulnerable.”
So what has all this got to do with housing policy? Fuller argues that the structure of the housing system impacts housing policy and politics because of the economic impacts of housing systems. Housing systems impact the economy in three main ways. First they have macro-economic impacts (e.g. on the financial system and how stable it is). Second, they have distributional outcomes – in particular they impact on wealth inequality. Third, they can generate precarity, i.e. when mortgage holders end up in arrears and negative equity due to property crashes, or when households are locked out of homeownership and live in insecure private rental housing.
Fuller’s hypothesis is that more financialized/commodified housing systems will be characterized by (a) higher house prices, and therefore exclusion from homeownership for some; (b) greater volatility in the housing market cycle; (c) more polarization between housing ‘winners’ and ‘losers’.
He then examines the housing policies of 67 major political parties in a dozen EU countries, and identifies the following major areas which define housing policy:
1. Generally ignoring the housing issue altogether
2. Promoting homeownership through mortgage support and targeted subsidies to buyers (demand side measures)
3. Increasing the amount of housing available – such as through state-provided housing (supply-side measures)
4. Enhancing protections for private and social tenants
5. Prioritizing “insider” access to housing (e.g., explicit attempts to bar migrants from housing)
Based on this typology of housing policies, he argues that we would expect the nature of housings systems to translate into housing politics in two main ways:
1. ‘The volatility and related precarity promoted by’ more financialized housing systems creates ‘larger gaps between winners and losers’, and therefore housing policy will feature much more prominently in political debate and all or most parties will prioritize housing policy
2. In terms of voter preferences, ‘wealthier, older and more rural voters – all groups that are likelier to own their own homes – should favour demand-side measures’, while ‘poorer, younger and more urban voters – groups that are less likely to own their homes and disproportionately rely on rental markets – should prefer supply-side housing measures and protection for tenants’
From an Irish perspective, one of the most interesting things is the idea that housing politics will come to the fore in countries with more financialized housing systems. If there was ever a country that supported this theory, it’s Ireland. Not only has the entire nation been discussing housing policy for the last decade, we have also seen a truly incredible amount of policy reform over the last ten years. This is also true, though to a lesser extent, of the other countries in the ‘Anglo-Dutch’ category.
Fuller also finds that generally speaking, the interests of different sectors within the housing system do indeed translate into voting preferences. Parties that favour supply-side interventions, as he terms them, do better among younger and more urban voters. Parties that favour demand-side measures do better among older and more rural voters (i.e. homeowners).
Ireland is a bit of an outlier, however, in that all parties support virtually all forms of housing intervention. Here’s what his analysis of Irish housing policy looks like:
In the above, it states that Fine Gael do not support demand-side measures or tenancy protections. I would dispute this as since 2016 they have supported the Rebuilding Ireland home loan (subsequently renamed to something I can never remember, probably the Vote for Darragh O’Brien Home Loan), and the Help to Buy initiative, and more recently the shared equity scheme, and they have also introduced rent controls and other tenancy protections. This suggests that there is little difference between Irish political parties when it comes to the major components of housing policy, with the exception that Sinn Fein don’t support demand side measures (although they are currently promoting mortgage interest relief, which is a demand-side measure). Ireland is also an outlier in that no party supports greater exclusion of migrants from housing.
So, what explains Irish exceptionalism here? There are a few sets of interacting factors that could plausibly be at work here:
1. The scale of the crisis in Ireland means most parties are now adopting a ‘do all the things’ approach to the housing crisis
2. Most Irish parties are competing for the centre – they are all reasonably ‘big tent’ parties that try to appeal to a wide base of voters
3. Despite our currently low homeownership rate, we are still culturally a nation of homeowners. That means that younger renters may still vote from the perspective of an ‘aspiring homeowner’ rather than as renters, thus even parties that want to appeal to younger, urban voters need to be seen to supporting homeownership-friendly policies.
The upshot is that in Ireland housing has become both a much bigger feature of political debate and, paradoxically, much less polarized. I expect that come the next general election we will see very little debate on the substance of housing policy, but a huge amount of debate about how vehemently the respective parties intend to pursue that policy if elected.
From a housing policy wonk perspective, this is actually a great outcome. Housing is being given loads of attention (and ever bigger budgets), but there is a lot of consensus across the political system about what needs to be done. I don’t ever recall ending this Newsletter about Irish housing on a positive note, but there’s a first time for everything!
Events & News
A group of Trinity researchers have been awarded funding for what looks to be a really fascinating project on sustainable and affordable housing, and there will be some PhD scholarships linked to the project advertised at some point. So if you’re considering doing a PhD in the area of housing I would definitely keep an eye out for that. I’ll be attending a session of the Oireachtas Committee on Housing and Homelessness next Tuesday, focusing on discrepancy between the RTB and CSO data on the number of PRS tenancies. I will update on this in due course.
What I’m reading
Circle, Clúid Housing and Respond have published a very interesting new piece of research developing a framework for analyzing the social impact of AHBs, you can watch a recording of the report launch here. We’ve a new release from the Housing Agency’s data insights series looking at Government housing expenditure. Important new piece of research from UK on the role of ‘national home builders’, market power and supply. Another piece of UK research argues for a public ‘master developer’, will be of interest here as some commentators, including Rory Hearne, have argued for something similar here. Speaking of Rory Hearne, the latest episode of Reboot Republic with the ESRI’s Barra Roantree is well worth a listen. Finally, a coalition of organisations in England and Wales have published a new ‘renters manifesto’, setting out a path to a radically reformed PRS. Something of the same sort in Ireland would be useful!