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Housing now biggest threat to Ireland’s economic wellbeing

Business leaders say we’ve reached a tipping point and that unless something is done to improve housing availability, our jobs-rich growth model will stall

The Irish economy has motored through a series of global crises – Brexit, the pandemic, soaring inflation – proving itself more resilient than anyone, even policymakers, could have predicted. It would be ironic, then, if it foundered on the domestic issue of housing.

The sharp bounceback in activity since Covid appears to have brought matters to a head, with companies saying they are unable to expand, take on new orders or hire staff because of the lack of rental accommodation and the constraint that this puts on their business.

Business leaders claim we have reached a tipping point on the issue, and that unless something is done to improve availability and affordability, Ireland’s jobs-rich growth model will stall.

In a report this week, employers’ group Ibec said the shortage of housing had become a “critical barrier to continued growth and development” in the economy. An inadequate supply of affordable housing, it said, “was the single largest impediment to attracting and retaining talented workers, without whom business investment and expansions are not possible”.


Padraig O’Neill, the managing director of Unum’s Technology Centre in Carlow town, a tech campus for US insurance giant Unum, says there are second-hand properties to buy in Carlow town and the surrounding area but there is little or no available rental property.

At best, there are two to three properties available on property website Daft on any given day, he says.

“The majority of the people we’re hiring are in the younger age bracket so they’re looking to rent not buy,” O’Neill says. “The culture of the company – being around experienced people, being able to learn – is being hindered because so many face long commutes or have to work remotely.”

Unum currently employs about 230 staff, doubling its workforce during the pandemic, and offers flexible working.

“We recruit a lot from surrounding colleges in Maynooth, Waterford and Carlow,” he says, noting that those from Maynooth and Waterford struggle to get accommodation locally.

“We’re trying to build a brand in those colleges – one that suggests Unum Technology in Carlow is a great place to go for your internship [the company converts about 80 per cent of its interns into full-time employees] – but if it involves a two-hour commute, then that can really dampen the overall experience.”

The exodus of smaller landlords from the market – a key factor driving the current undersupply of rental property – is particularly evident in Carlow, according to O’Neill.

In a recent report, Daft said there were just 1,087 homes available to rent nationally on its website as of November 1st last, down about 25 per cent on the same date last year, and just 345 in Dublin.

According to the Society of Chartered Surveyors Ireland (SCSI), about 40 per cent of property sales in the final three months of last year involved landlords selling their investment properties. The SCSI linked the exodus to “overly complex” rent legislation, low rental returns, and compliance with “onerous” housing standards.

John O’Flynn, general manager of the five-star Fota Island Resort in east Cork, says the biggest challenge for the business is the rental market.

“Typically at this time of the year, we would be going out to the different culinary colleges in Europe to bring in chefs for summer placements, but we just cannot secure a short-term rental or a long-term rental of any description,” he says.

Whether employees can get accommodation in the local area has become a bigger issue for them than salaries and there is now an onus on the employer to provide the accommodation, O’Flynn says. While the hotel provides a certain cohort of staff with accommodation, the business has long since exhausted this option.

O’Flynn says the big upturn in economic activity since Covid has generated an unrealisable demand for rental property. Demand in the hospitality industry (for leisure holidays, weekend breaks, corporate events) has never been as strong, he adds, but housing has “become a real barrier for us”.

He also highlighted a new phenomenon, with some construction companies working in the Cork area now using the Fota resort to house staff on a temporary basis for the duration of a project – and paying a premium to do so. “We wouldn’t have seen this type of business before,” O’Flynn says.

From an employer perspective, there is a need to reinvigorate the policy drive around the availability and affordability of housing

—  Fergal O'Brien

Ibec’s “Better Housing, Better Business” report, published on Monday, said the State’s housing crisis had increasingly become a concern in relation to cohesion in the workplace and society more broadly.

“Younger workers, in particular, are financially pressed by ever-higher rents and the receding prospect of homeownership. This ultimately spills over into issues around well-being and productivity in the workplace,” it said.

“Ibec members have detailed struggles to us when trying to fill key roles due to a lack of adequate affordable accommodation,” the organisation said.

It called on the Government to urgently deliver policies to speed up the delivery of housing and to improve viability and affordability, including a temporary VAT refund to offset rising construction costs; and the introduction of a State fund, set up with proceeds from the Local Property Tax, to subvent the cost of levies for new homes.

Ibec says up to 20,000 social, cost-rental and affordable homes should be provided each year.

While new home completions rose to almost 30,000 last year, exceeding the Government’s 24,600 target, the 9,000 social affordable housing targets won’t be met.

Unpublished research by the Housing Commission also suggests that the State may need up to 62,000 homes built per year until 2050 to meet demand – almost double the annual target of 33,000 contained in the Government’s Housing for All plan.

Ibec urged the Government to progress its new Planning and Development Bill, which aims to overhaul planning here, amid complaints from industry that the system is entirely under-resourced and too slow.

“From an employer perspective, there is a need to reinvigorate the policy drive around the availability and affordability of housing,” Ibec’s director of lobbying and influence Fergal O’Brien said.

Ireland is not unique in facing a housing crisis. However, as a small, globalised economy, the availability of accommodation is an important economic enabler

—  AmCham chief executive Mark Redmon

“This will require a suite of measures to improve the viability and affordability of homebuilding, such as addressing emerging financing deficits, reform of the planning and procurement system to speed delivery, a ramping up of ambition in affordable and cost-rental housing, and significant investment in skills and modern methods of construction,” Mr O’Brien said.

Patrick Mulholland, managing director of medical devices company VistaMed, which is based in Carrick-on-Shannon in Co Leitrim, says it’s not the cost but the availability of housing that is proving the biggest headache for the company.

The lack of supply is a constraint on growth, he says. The company has had to take a much more active role in securing accommodation for workers, including providing financial guarantees to landlords.

VistaMed, which already employs 670 staff, is planning to recruit an additional 50 people over the next 10 months but that’s likely to prove difficult in the current climate, Mulholland says,

Beyond that point, he believes housing will limit the company’s expansion. “I simply can’t see us going beyond 750 unless there’s a major shift in housing availability,” he says.

“Housing will limit what business we can take on going forward. That’s the bottom line. As a global company, we would look for other destinations – other than Ireland – if we’re unable to locate the workforce here.”

The American Chamber of Commerce Ireland, which represents US business interests here, says it has consistently highlighted the delivery of housing as a key issue when it comes to maintaining current and securing future investment in Ireland.

In a recent survey of member companies, 98 per cent said the availability of residential accommodation was important to maintaining FDI (foreign direct investment) employment in Ireland.

“Ireland is not unique in facing a housing crisis. However, as a small, globalised economy, the availability of accommodation is an important economic enabler,” AmCham chief executive Mark Redmond says.

“AmCham has been consistent in its engagement with Government in recommending a continued focus on enabling the on-time delivery of commitments under the Housing for All plan and the continued prioritisation of planning and capital investment in accommodation provision,” he adds, noting that reform of the planning process is key in supporting the development of housing and business growth.

Simon McKeever, chief executive of the Irish Exporters Association, says: “A significant issue that has come more to the fore over the last number of months amongst Irish Exporters Association members is housing. Inflation and the cost of doing business are already pressing issues, but the acquisition and retention of talent is becoming a concern.

“Companies are worried about the lack of housing and the cost of it and the impact this is having on their ability to be able to attract and retain talent, particularly when you get into more rural areas,” he adds.

A recurring problem in Ireland has been the stress on infrastructure from a massive expansion of the private sector. Since 2014, the Irish economy has grown by more than 50 per cent, largely as a result of a spike in investment and employment almost exclusively in the private sector. The surge has created more than 400,000 jobs – 25 in the private sector for every one in the public sector – but a myriad of bottlenecks across the economy.

Housing is perhaps the most obvious manifestation of this.