For many people, Ireland’s housing bubble was a home-ownership bubble. According to this myth, we were all corrupted by the dream of home ownership and indebted ourselves excessively to get on the property ladder.
Like all the best myths, this story is true up to a point.
What it hides, however, is the important role of the private rented sector in Ireland’s property boom and bust. Tenants are used to being written out of housing policy, but it is important that their story is not written out of history too, as it tells us a lot about where we have come from and where we are going.
Let’s start with the parts of the familiar story that are true.
Home ownership increased steadily from the foundation of the state until around 2002, reaching a peak of around 80 percent in 2001. During the boom years (from the mid-1990s), this was driven by growing employment and wages to some degree, but, most importantly, by a credit bubble.
Up until the early 2000s, then, it makes sense to talk about a home-ownership bubble. After that year, however, something different starts to happen. For the first time in history, the home-ownership rate not only stops rising but starts to fall: from 80 percent in 2001 to around 70 percent today.
As we know, however, even after home-ownership rates started to decline in the early 2000s, the property boom continued. What made this possible was the growth of the private rental sector.
In other words, people were still buying houses (and borrowing to do so), but many of them were no longer chasing the home-ownership dream – they were chasing the landlord dream. Buy-to-let mortgages grew rapidly, from 18 percent of outstanding mortgage loans to 27 percent, between 2004 and 2008.
In short, and as argued by Michelle Norris of UCD’s School of Social Policy, landlords were pricing would-be home owners out of the market and driving up house prices. The more people there were who could not afford to buy houses, the bigger the rental sector, and the more opportunities for investing in rental accommodation.
Recognising the role of the rental sector in the property bubble is particularly important because it has a lot to tell us about growing housing inequality in Ireland – inequality that continues today.
There are two aspects to this inequality. Firstly, during the peak of the boom, we see the emergence of a class divide in terms of the gulf between the rental sector and the home-ownership sector.
During most of the twentieth century, the tendency was for home ownership to grow. As part of this process, working-class households increasingly became owner-occupiers. Class divides continued, of course, but housing tenure wasn’t necessarily a key dividing factor.
From the early 2000s, we saw the start of a period in which working-class households, and especially what has been called the “precarious class” of low-income households, can no longer access home ownership and are left behind in a rental sector, which, again, for the first time in Irish history, started to grow.
This group is not only locked out of the owner-occupancy market, it finds itself creating a new market for investors and landlords, who can increase rents as pressure grows on the rental sector, especially in urban areas.
Secondly, there is an important process here that relates to migration and social exclusion.
The dynamics that started to take hold from 2001 were, in large part, about white Irish home owners buying second (and third, and fourth) properties to rent to the growing migrant communities. At the height of the bubble, in 2006, more than half of all migrant-headed households were renting, as opposed to just 6.4 percent of Irish-national-headed households.
Migrants experience the greatest difficulty buying their own homes both because many of them are confined to the lowest-paid and most insecure work, and because they have greater difficulty accessing mortgages (due to a lack of credit history, etc.).
It has been said that at the peak of the bubble, Polish workers were coming to Ireland to build the houses they would live in. It would be more accurate to say they were coming to build the houses they would rent from us.
The role of the rented sector in the Irish boom is not just important for understanding our past, it is also important in terms of what’s going on right now and what will happen in the future.
The private rented sector is at the epicentre of the current housing crisis. It is soaking up all the pressure from the owner-occupancy sector (where people can’t get mortgages or afford to buy) and the social-housing sector (where the government thought it would be a great idea to cut funding by 90 percent during a housing crisis).
Rents are back to levels last seen at the peak of the boom, yet wages and full-time work have decreased since then, and so has access to rent supplement. But the problems experienced by renters are an investment opportunity for some.
As a whole, the sector has doubled in 10 years, and currently represents one-third of all households in Dublin. Irish investors, now joined by a host of global firms (the vulture funds chief among them), are once again in a position to make a tidy profit from the growing number of low-income and migrant workers confined to the private rental sector.
The experience of tenants, with its class- and migration-based inequalities, has been written out of the history of the boom and bust. Today, tenants in the private rented sector find themselves once again at the sharp end of housing inequality, and once again ignored by those whose decisions create that inequality.