Housing challenges across the island of Ireland

Nicola McCrudden, our new CT Senior Associate Consultant, outlines the key challenges for housing providers across the North and South of Ireland.

It is the tenth anniversary of the financial crash that sent shock waves around the globe. It began in 2007 with crisis in the United States’s sub-prime mortgage market and developed into a full-blown international banking crisis with the collapse of Lehman Brothers. The impact of the crash was felt sharply on the island of Ireland and we are still living with the consequences. One of the biggest challenges facing us today is the supply of genuinely affordable housing.

North

In the north, there is a mixed picture (see box below). House prices are lower than they were 10 years ago. The average house price in Belfast is £132,000 – 28 per cent lower than in 2008. Negative equity remains a real problem for the market generally, but especially for mortgage-holders who need to move.

There are positive signs though: more first time buyers entering the market, and more homes being built. But the problem of affordability remains, particularly for low income households. The impact of welfare reform is affecting people’s ability to pay their rent and with bedroom tax mitigation measures soon to run out, significant challenges lie ahead.

During the recession, the Stormont Executive continued its capital funding programme for new social housing provision, meaning that people continued to be housed from the waiting list. However, there is widespread recognition that more homes are needed in order to turn the curve on housing stress. In the meantime, Northern Ireland has a thriving private rented market to ease the pressure, but as rents start to creep up and loss of private tenancy emerges as a main cause of homelessness, this option will not be sustainable in the long term.

South

In the South of Ireland, the under-supply of housing manifests itself in rising housing costs. The Irish economy continues to perform strongly, but there is a risk that persistently high housing costs could erode competitiveness with higher wage demands. The difference between the ‘haves’ and ‘have-nots’ is stark – homelessness levels are unacceptable and increasing numbers of families are struggling to keep a roof over their heads.

Building homes that are genuinely affordable is the number one priority. A whole system approach is required to meet housing need and demand – including sufficient social and affordable homes to rent and buy. However, more focus is needed to create and support the conditions that will enable AHBs and local authorities to provide significantly more social housing.

Housing costs

Northern Ireland

  • £132,169 Average house price today
  • £224,670 Compared with 2008 peak
  • £66.61 Average weekly social rent
  • £94 Average weekly private rent
  • 1,103 Number of homes built in 2017/18

Republic of Ireland

  • €159,460 Average house price today
  • €320,788 Compared with 2008 peak
  • €50.63 Average weekly social rent
  • €244.62 Average weekly private rent
  • 2,297 Number of homes built in 2017/18

Source of data: Dept for Communities N.I Stats; Dept.of Housing, Planning and Local Gov (ROI); Residential Tenancy Board’s Rent Index

Challenges

The voluntary housing sector is performing well, in difficult times, and there is an appetite for growth. Housing organisations are operating in a more complex funding and policy environment and have had to change. The main challenges are risk – understanding and managing it, and developing capacity within teams to co-ordinate ambitious build programmes, to manage assets and to sustain tenancies and communities in the years ahead.

None of these problems are insurmountable – North or South. Nonetheless, government interventions, informed by robust evidence, with clear direction and strong leadership are needed to support the sector to meet what is required.

This will be challenging in the face of Brexit and lack of a NI Assembly: political stability and certainty around finance, costs and delivery mechanisms are essential if we are to deliver positive housing outcomes.

For more information or to discuss this article, contact: nicola.mccrudden@campbelltickell.com

This article appears in: CT Brief – Issue 38