Belfast Telegraph

Thursday 27 November 2014

Time to rethink housing policy in Northern Ireland

ON a quarter by quarter basis there are some signs of an end to a six-year decline in house prices and the number of house sales is rising again, although still well below the peak record in 2007.

Mark Carney, Governor of the Bank of England, correctly drew attention to the slow rate of recovery of house prices in Northern Ireland. Some spokespersons for the various interest groups (some estate agents and lending institutions) were quick to talk up the recovery.

In the last decade, the housing market in Northern Ireland has not been moving in parallel with other regions in Great Britain. Local house prices, in six years, have fallen by about 50%. No Great Britain region has had this experience. Negative equity is, proportionately, now a more extensive issue. In comparative terms, the changes in the housing market in Northern Ireland have been closer to those south of the border.

The key fundamental yardstick for house prices is not that average prices have fallen by 50% compared to 2007. It is that average house prices in 2014 have returned to levels which restore the relative relationship with Great Britain regions to where it was a decade ago, before Northern Ireland lived through its own unwelcome price bubble. In a longer-term perspective, Northern Ireland house prices now have a more normal relationship to local incomes and spending power.

With house prices now reflecting a more normal market place, there is a need to consider some of the other influences on the housing market and widen the review to ask where the emphasis of government policies should lie.

Two of the major concerns which impinge on the provision of housing are, first, the inadequate rate of building of new homes and, second, the future provision and management of social housing, particularly the role of the Housing Executive as the provider of nearly 90,000 housing units.

The number of new housing units being built has fallen sharply in the last seven years. The total population in Northern Ireland has been rising and the average number of people per household has been falling. Those changes, alone, would generate an annual demand for over 2,500 extra units each year. Then, in addition, there is an unpredictable influence of the number of emigrant families coming to live here.

Critically, there is a need for social policies which allow the gradual replacement of older lower standard inner-urban area housing, much from the early part of the 20th century (if not even earlier). Northern Ireland still relies on, and maintains, much urban area housing that should be replaced.

The current urban regeneration programme merits a major uplift. The impact of urban regeneration in terms of housing and environmental policies is, in 2014, on a smaller scale than it was 20-30 years ago, when it was partly a responsibility of the Housing Executive.

Today the Housing Executive no longer has a rebuilding programme. Indeed, the future role and activities of the Housing Executive are under review.

The minister with responsibility for housing policies, Nelson McCausland, has committed to set out firm proposals to reorganise social housing, including ways in which the Housing Executive can be transformed to introduce better management, higher standards and more appropriate housing capital finance for the housing assets currently owned by the Housing Executive.

The criteria by which the minister's proposals are assessed must be the impact on housing standards, the improved scope for a larger programme of social housing and the better management (and replacement) of the capital debt still being carried by the Housing Executive.

There is an emotional reluctance to endorse the demise of the Executive. However, there are big advantages to be grabbed in a rethink of how social housing is provided and financed.

Reshaped housing policies are now overdue. They will need an agreed degree of political consensus...

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