Dublin Opinion

That is the land of lost content,
I see it shining plain.
The happy highways where I went
and cannot come again.

I was brought up in the Seventies. Strong colours and oversized jumpers. These are my memories. The boundaries of my world were the Harmonstown road to the Santry river, the shops on Edenmore park, the old dump next to the school, and the library in Raheny. I watched kid shows on BBC and UTV, read stories about Johnny Alpha and Tarka the Otter, and fell asleep to Match of the Day. (This has stayed with me. The sounds of English league soccer can still settle me to sleep.) The news I got came from John Craven, and the newspapers my father read were the Evening Press, News of the World, and the Sunday Independent. The comic strips in each never made sense, and all my copybooks were stamped with ‘Guaranteed Irish’ on the back.

These days I find myself once again in the seventies, not so much to shift through my memories, but to try to make sense of mortgages, banks and builders. A lot of the assumptions we now hold about housing in Ireland were developed during this decade, especially the idea of a house as an investment for the working man, as a store of value, as a bulwark against inflation and taxation.

It is in the seventies that the full resources of the state are given over not to the provision of housing, but to the provision of mortgages. By the end of the decade the state is spending hundreds of millions of pounds in mortgage incentives in order to make housing ‘a safe and profitable outlet for funds’ (Irish Times, 12 Jan 1979).

The use of the structures of the state to safeguard housing speculation - to protect speculators from the vicissitudes of speculation - is not a by-product of the Celtic Tiger. It took decades to put these structures in place, and it is in the seventies that we first see them in bloom.

One of the oldest ghosts in the residential market was laid this week by Mr. Edmund Farrell, chairman of the Irish Permanent Building Society, when he revealed that the purchase of a new home is not necessarily “the average man’s biggest single lifetime investment” - simply because the average building society mortgage has itself a lifetime of only about 10 years.

The significance of this information is considerable, and it does much to explain the frenzy of activity both in the residential market and in the £150 million Irish building societies’ movement. If the average mortgage is ‘turned over’ once in a decade, the average man can buy not one but two or three different homes in his working lifetime.” (’The Best Investment is a Roof over your Head’, Irish Times, 10 Feb 1973)

The late 1960s saw the arrival of foreign merchant banks to Ireland, principally from the USA, but also from Britain and Germany. They brought with them a large amount of credit, which they sold on in part to builders and speculators. It’s around this time that Ireland sees its first real commercial property boom, which reached its peak in 1972. These were also the years of TACA, the Fianna Fáil fund-raising body headed by Charles J. Haughey.

Kevin Boland, who was Minister for Local Government from 1965 to 1970, and responsible for local authority housing, recalled a TACA meeting in the late 1960s:

We [the cabinet] were all organised by Haughey and sent to different tables around the room. The extraordinary thing about my table was that everybody at it was in some way or other connected with the construction industry.” (Kieran Allen, Fianna Fail and Irish Labour, p.138.)

We covered this before. In 1972 Rosita Sweetman wrote the following in her book, On Our Knees: Ireland 1972:

You may wonder why the Fianna Fail government doesn’t do something about controlling the price of land, the building of houses and general accommodation problems in a city bursting at the seams…If you are still sceptical, you might take a trip around the newer, posher estates being built on the outskirts of Dublin. The names ‘Gallagher’, ‘McInerny’ and ‘Sisk’ will re-occur constantly on the billboards. Now, if you dig a little deeper you will discover that Mr. Matt Gallagher and his brother are two of the biggest building/contractors in Dublin. and they’re among the biggest contributors to TACA. And TACA is the fund raising section of the Fianna Fáil party, without TACA, Fianna Fáil would go bankrupt in the morning. And if you still don’t see why the government don’t do something about compulsory purchase of land for subsidized housing, and curbing the activities of the private speculators, you’re very naive indeed. (p.31)

There comes a point when it is not enough to build houses; that despite all the tax incentives in the world, you still need people to actually buy the houses. The squeeze that happens in the 1970s was outlined by the Irish Times in the quote above: why charge a man 10 years for a mortgage? Why not get him to buy three in thirty years, or, even better, get him to spend thirty years paying interest on one?

This becomes the dominant narrative in Irish housing: charge more, for longer.

A significant group of leading builders are preparing statistical and other ammunition for a case to be put to the Minister for Local Government calling for 100% house loans in certain cases, coupled with a remission programme to ease the repayments burden on home-buyers in their first few years in a new house. A representative of this group pointed out that with rising house costs and values, a 100% mortgage “effectively becomes an 80% mortgage within one year, thus ensuring adequate asset backing for the advance.” (Irish Times, 18 July 1975)

government incentives on mortgages, which were put forward as aids to price and affordability, ending up simply adding to the cost of mortgages, making it harder for young couples starting out in life to settle down and buy a house. In 1982, after almost 15 years of incentivising owner-occupancy, the state’s policies had merely benefited the builders, banks, building societies and estate agents, leaving the public to pay the price of this ’safe and profitable outlet for funds.’

The director of the Building Materials Federation yesterday criticised a study of the effect of government subsidies to private housing made by two UCC economists and published in the October issue of the ESRI Economic and Social Review.

The article concluded that government subsidies to private housing merely raised the price of new houses and had little impact on increasing the supply of new houses.’ (Irish Times, 19 November 1982)

By the 1980s the pattern of public subsidies for private mortgages was well-established. It had become the norm. And by the end of that decade, the state had expanded into tax incentives for financial services. Ireland’s international laundromat, the IFSC, had opened for business.

But that’s for another day.