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It’s depressing that two big trends driving Ireland’s housing crisis continue unabated

Two decades on and the State’s housing woes are as bad as ever while the arguments about solutions continue

The most depressing thing about Ireland’s housing crisis is that the two core trends that drive it – prohibitive prices and chronic undersupply – are continuing, almost unabated.

Many will argue that one drives the other and that if the basic laws of supply and demand were allowed to play out we would have some sort of solution. Others contend that the property industry can’t deliver at affordable rates (the industry cites construction costs and a dysfunctional planning system) and that even if we get supply, prices will still be out of reach of most and what we’re experiencing is a classic case of market failure.

Of the first core trend, price, the Central Statistics Office tells us that the average price paid for a home nationally in the year to September was €349,529. In Dublin, it was €525,153. In Dún Laoghaire-Rathdown, the most expensive local authority area, it was €725,692.

Those figures are seven, 10 and 14 times the average full-time income here. And with house price inflation running at double the level of wage growth, these ratios are getting worse, not better.


House prices used to track incomes. A ratio of three to one used to be the rule of thumb. The Central Bank’s lending rules still reflect that, but somewhere along the way this relationship fractured and house prices became a gross multiple of income.

It’s still an open debate as to why. The financialisation of real estate, low interest rates (cheap credit has allowed people to borrow more and more, inflating price), urbanisation, undersupply are all proffered as explanations.

Whatever the cause, we’ve had a rapid decline in home ownership as a result. The share of 25-34 year-olds who own their own home has more than halved, falling from 60 per cent to just 27 per cent between 2004 and 2019, a recent study by the Economic and Social Research Institute (ESRI) indicated.

The lack of affordability in the purchase market has swollen demand on the rental side. Rental pressures are also a function of the second core issue: supply. And this is where the State itself is implicated.

Private sector construction has always been cyclical, shifting up and down on the back of wider economic trends.

Historically, the output gap in a downturn was smoothed by public sector building programmes. Even the penurious Irish administrations of the 1950s and 1970s built consistently. The legacy of these building programmes is all around us.

However, since the 1990s successive Irish governments have effectively stopped building social housing, at least to the same extent, and switched to subsidising rents instead: a short-term budgetary saving but a very disruptive policy long term.

Under the Government’s previous housing strategy, Rebuilding Ireland, the average housing output was 24,673 units over the six years of the programme to 2021. As former University of Limerick academic Anthony Leddin noted in a recent opinion piece in The Irish Times that “this is well above the 15,000 threshold, suggesting that the policy has been a resounding success”.

But this is before he points out that 19,973 or 81 per cent of this output was achieved under three categories: subsidising rents under the Housing Assistance Programme (HAP) and the Rental Accommodation Scheme (RAS); acquisitions; and leasing. In other words, the Government was counting rent supports and leasing arrangements as additional units.

We’ll spend close to €1 billion just on HAP this year, 80 per cent up on the 2018 figure.

The government’s abdication of its social housing responsibility was perhaps most stark in the wake of the 2008 financial crisis. When private sector construction crashed, the government built next to nothing and within five years we had a worse supply crisis than before the crash.

This trend, like the price one, continues.

According to the National Oversight and Audit Commission, the most comprehensive data set on social housing here, the State’s social housing stock rose by just 3,000 units to 141,483 last year.

The commission collates net additions to social stock across the State’s 31 city and county councils, which includes new builds, new and second-hand acquisitions, voids coming back into stock and Part V units acquired from developers. They also allow for outflows from the sale of units to tenants and demolitions.

The figures show that that Dublin City Council added 443 units to its existing stock, Dún Laoghaire-Rathdown (77), Fingal (37), South Dublin (5), Cork City (34) and Galway City (118).

These low build rates coexist with record levels of homelessness.

The lack of social housing and the Government’s over-reliance on rent supports has created a powder keg of a rental market, where getting your hands on an available property, never mind the cost, is a veritable lottery. Property website published figures last week suggesting advertised rents rose at an annual rate of 14 per cent in the third quarter, the highest level of advertised rent inflation on record. It also noted that there were just 1,087 homes available to rent nationally on its website as of November 1st, including just 345 in Dublin.

The Government presides uneasily over this crisis, scrambling to deflect attacks from Sinn Féin. And because of its reliance on the private sector for supply (even social housing supply), it is effectively powerless to change the dynamic and must hope a big uptick in supply is first delivered and then that it makes a significant change.

Of the crises we’ve faced: banking collapses, mortgage arrears, Brexit, the pandemic, soaring inflation: housing remains the least changed, the most intractable.