The week in housing 26/03/21
More worries for renters
Hard to believe but yet another eventful week in housing with the publication of two new reports and the progression of yet another piece of legislation for the private rental sector. On the data front, the RTB rent index surprised many commentators by showing that rents are up across the country and in the capital. Average annual rents increased by 2.1% in Dublin and 2.7% nationally. This contrasts somewhat with the data presented in the last Daft.ie Rent Report, which indicated that rents were down in the fair city.
For those of us keeping an eye on trends internationally, the story of Irish rents during the pandemic wasn't too much of a surprise. Many countries have reported stable rent levels or modest declines. Declines are particularly evident in the 'class a' or 'prime' segment of the PRS (i.e. luxury style apartments) and in very central locations. In fact, there has been a huge amount of optimism evident in the so called 'multifamily' investment markets (PRS to me and you) and a growing belief that rents will prove resilient throughout this crisis (e.g. this report from JLL). There is no consensus on why this is, but to my mind the most likely explanation is simply that the structural supply and demand imbalance in urban areas is so large that it would take a major shift to force rents down. Also, for most renters there is no alternative and a home is, to use the market speak, a 'needs based investment', i.e. people can't do without one.
The other data that came out this week was ESRI forecasting on the economy and on housing completions. This was quite worrying. It shows that completions are down significantly. The ESRI estimate that this year will see just 15,000 completions, down about a quarter on the 2020 and 2019 figures. This will in a sense reverse the gains made in recent years and makes the target most commentators agree on (around 30,000 - 35,000 units per year) seem very far away. This, of course, comes on top of our 'lost decade' of housing supply and could really entrench the structural imbalance between supply and demand. To make matters worse, at least from one point of view, the ESRI forecasts robust economic growth and record levels of savings (the savings ratio increased to over 35 per cent in Q2 2020). In short, restricted supply combined with robust economic growth and high savings level can only mean one thing: increased house prices. And lest we forger, rents tend to track house prices. The other possibility, of course, is that we have yet to see the real economic toll of the pandemic and that when this hits it will suck some of the demand out of the market.
On the policy front, the Department of Housing's quest to make legislation in the private rental sector harder to understand than the De Vinci code continues. This time around it takes the form of the Residential Tenancies Amendment Bill 2021. The Bill will extend the ban on evictions and rent increases for those tenants who are in rent arrears due to income loss arising from Covid-19 and who are on a Covid-19 payment. It was due to expire next month, but is being extended to July. No doubt it will need to be extended again in July so it is anybody's guess why they are giving such a short extension. Moreover, according to Eoin O Broin in the Dáil, only around 400 tenants have actually declared themselves as 'relevant persons', and hence stand to benefit from these protections. The much bigger issue, as O Broin and others have pointed out, is that most tenants will lose their protections when the 5km travel restriction is lifted.
Luckily the Residential Tenancies legislation is now so complex no one can understand it anyway so it makes little difference!
Events
If you missed the Post-pandemic housing transformation and the value of home seminar organised by the RIA I strongly recommend checking out the recording. Susan Smith gives a great presentation which brings together a lot of what we have learned about the political economy of housing over the last decade or so and uses that to think through the post-pandemic context.
High rise housing is one of those issues that really divides opinion. Some see it as the key to sustainable development and high density, others argue there are much better ways to achieve density. It's not an issue I know much about myself so I am looking forward to the launch of this new UK report on High Rise Housing on the 28th of April.
Finally, not strictly speaking an event, but the Reboot Republic is doing a special series called 'housing shock' which is well worth checking out, especially this interview with Killian Woods of the Business Post.
What I'm reading
Lots of interesting reading to look forward to this week. Valesca Lima has a new article on a 'radical right to housing' in Urban Studies. One of the things I spend most time reading about these days is the decline of homeownership and the rise of renting. Richard Ronald, known for his book The Ideology of Homeownership, but also his more recent work on the post-homeownership society, has a new article with Rowen Arundel (whose work I really rate in general), and Adkins et al. tackle similar issues but from the point of view of wealth inequality and class.