Ronan Lyons | Personal Website
Ronan Lyons | Personal Website

student accommodation

In defence of clustering: “Student City”

It seems in Ireland that we are not too fond of clustering. We are the least urbanised country in Europe – on a par with Portugal – with less than two thirds of the population living in cities. Elsewhere in the high-income world, typically more than 80% of the population live in cities.

It is important to remember, though, that this is not because we have a different economic structure. Previously, we might have been less urban because we were a more agricultural society. Now, though, over 85% of our jobs are in our main cities.

So we have a huge mismatch between where we work and where we live. These leaves us with some of the longest commutes in Europe. The number of people commuting more than an hour each way on a daily basis went up by more than a third between the 2011 and 2016 Censuses.

You might think that this is just because Irish people are different. “We want our patch of land”, the argument goes. Funnily enough, this is also what people in the UK say – even though they are one of the most urbanised countries.

It’s unlikely that our poorly placed homes are as a result of our preferences, therefore. And if it’s not demand-led, then it must be supply-led. Planning and zoning rules are one of the principal determinants of housing supply.

Indeed, the best research shows that, in response to a 10% increase in demand for housing, as long as land-use regulations do not stop supply from responding, prices need not increase at all.

But Ireland’s housing market is, as we all know, a heavily regulated one. This week, Apple scrapped its plans to build a data centre in Athenry. This news came as a surprise to nobody. In the time it took Apple to open the doors to a data centre in Denmark, and start planning a second one there, it was still facing court challenges here.

Fortunately, it looks as though the Government is finally seeing the harm that land-use regulations can bring. Its Ireland 2040 plan is the first government strategy to acknowledge the cities, and city centres specifically, will have to be the driver of population growth in the future.

Public policy, therefore, is turning – however slowly – in favour of density. But another fight still remains – in favour of clustering. Density is about how many people in a certain neighbourhood. Clustering means the same kind of activity in the certain neighbourhood.

Don’t get me wrong – diversity is important. Jane Jacobs – who wrote one of the bibles of urban economics back in the early 1960s – explained in simple terms how having a mix on the street keeps it safe. But in large cities, there is scope for both diversity and clustering.

We know that clustering is a natural human tendency. Just look at the oldest street names in our cities. In Dublin, the old Viking city includes Winetavern Street, Cook Street and Fishamble Street.

Last year, Dublin City Council changed its rules in order to make it harder for student accommodation to cluster in and around higher education institutes. This is as daft as it sounds: by making it harder to build new accommodation for them, they will continue to band together in fours and fives and – with a budget of up to €600 each in central Dublin – easily displace low-income renters.

Instead, the city council – and its peers elsewhere in the country with higher education institutes in or near areas they control – need to think about where its “Student City” will be.

Over the next decade, full-time student numbers are set to rise by roughly one third. On top of this, the Government has made higher education as an export one of its priorities. This will increase student numbers even further.

All of these students will need somewhere to live. And if we don’t have purpose-built student accommodation for them, they will gobble up more and more of the existing stock of dwellings – which are disproportionately family homes.

In addition, purpose-built student accommodation doubles up as tourist accommodation in the summer. So meeting the needs for student housing will also ease the pressure on the short-term lettings market, the so-called Airbnb effect in the rental market.

I’m sure we could all think of potential locations for Dublin’s “Student City”. An obvious one is Dublin’s fruit markets, between Smithfield and Capel Street. This area is close to 17 acres of prime urban land, within walking distance of the Luas, both main train stations, and the DIT and Trinity campuses.

Most of it is currently used as single-floor warehouses for fruit and veg. While those businesses would certainly need to be accommodated – could they use the basements in a new set-up for example? – it is important to keep perspective on the size of prospective benefits as well as the costs.

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An edited version of this post was originally published in my column in the Sunday Independent.

Time to view students as people too

Last month, the latest Daft.ie Rental Report showed just how bad the market is for today’s renters. Rents are now up by 70% in Dublin from their lowest point, in late 2010, while elsewhere in the country they have risen by 45% on average – although this hides significant variation by county.

Not only do rents continue to increase, they are doing so at a faster rate: for the fifth quarter in a row, rents rose by at least 10% year-on-year. It would be a brave civil servant who would argue that Rent Pressure Zones are working.

As ever, prices are just a symptom, though. The underlying cause is a lack of supply. There were fewer than 3,000 properties available to rent nationwide on the 1st of August this year. That’s not only down almost 20% on the same date a year earlier, it’s also the first time ever that fewer than 3,000 homes have been available to rent.

The last time the rental market was experiencing anything like this was in early 2007, when rents were increasing at roughly 11% per year. Even then, though, there was an average of 4,800 properties available to rent at any one time – roughly half those in Dublin.

Now, though, availability in Dublin is close to 1,000. Comparisons with ten years ago also understate the issue: the number of people renting has risen by more than 50%. If 5,000 homes to rent was a tight market 10 years ago, the equivalent tightness today would be 7,500.

This sort of rental crisis is unprecedented and is clearly linked to the homelessness crisis. Healthy housing markets are built on a number of key ingredients. One of these is the presence sensible mortgage rules, which we had through the Building Society system from the 1860s until the late 1980s, and again since the Central Bank rules came in in 2015.

A second key ingredient is a responsive social housing sector. Ireland had this more or less from independence – but it was dismantled steadily from the 1980s on. By the mid-2000s, loose lending was taking the place of social housing.

But we know have a combination of mortgage rules but no social housing. Never before in postwar Ireland have we had this combination, which is what makes the homelessness crisis so severe.

Into this environment step our fledgling households, those starting college for the first time this month. What chance do they have? Many students are already choosing not to study in Dublin, even if a course there offered them the best prospects, because of the cost or the lack of a home. Many more are commuting very long distances to try to make things work.

As a society, we should be happy with neither of these as solutions. Even leaving aside the potential for higher education as a lucrative export industry, we should be trying to ensure that our students have the supports necessary to fulfil their potential.

What is obvious from a quick glance at the figures is that we are failing them, particularly when it comes to their accommodation. In the UK, roughly half of all students who don’t live with their parents live in purpose-built student accommodation, either on- or off-campus.

In Ireland, roughly 35% of students – rather than the 10% seen in the UK – live at home with Mammy. Of the remainder, only a small fraction– a little more than 10% – live in purpose-built student accommodation. This of course puts pressure on the wider rental sector, as students group up and take family homes out of circulation.

What is truly frightening for me, as an outside observer, is how ill-prepared our policymaking system is for the future. We know from demographics that the number of third-level students is set to grow by at least 50% over the coming decade. Factoring in likely increases in enrolment and in net migration, as well as the targeted increase in non-EU students, student numbers in Ireland may double over the coming 15 years.

Suppose we allow for one third of Irish students to stay with Mammy. Even reaching the UK ratio of one student in purpose-built for every student in the wider rental sector would mean a dramatic increase in purpose-built student housing over the coming decade.

The country needs to plan for having 100,000 units in purpose-built student accommodation by 2025. It currently has about one third of that. Put in its simplest terms, Dublin needs to be seeing a new block of 300 student beds opening every months for a decade – while the rest of the country (as a whole) needs to see roughly the same.

But with Dublin City Council already trying to change the rules to make it easier to say no to proposals for student beds, what are the odds that this will happen? Sadly, unless a change in mindset happens fast, we are likely to read grim news on student housing and the rental sector for some years to come.

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An edited version of this post was originally published in my column in the Sunday Independent.