Not long ago, Ireland had one of the world’s highest rates of home-ownership.The last several years have torn up those assumptions, leaving the
country in the grip of a worsening housing crisis. Homeownership has
dropped, evictions and homelessness have climbed sharply, surging demand
for rental units has led to a shortage, and soaring rents are fodder
for daily conversation, political campaigns and street protests.
Ireland's housing woes can be summarised adequately by the phrase 'plenty of people, not enough homes'. The country enjoys a rapidly growing population. This is due to a substantial surplus of births over deaths, something that most other high-income countries would love to have. It is also due to net migration, again a symptom of economic success. Taking into account the various sources of demand, it is clear that the Greater Dublin Area needs at least 1,200 new homes a month - and probably more if it enjoys sustained net migration. But over the last five years, it has seen about one quarter of this level of activity.
One clear policy failure is the dereliction of duty on the part of government, both central and local, to provide social housing. It is simply not credible to expect the market to provide housing for people with incomes so low they can't cover the cost of building their home.The cost of new social housing should be borne by all members of society, not delegated to the inhabitants of new homes.
One argument is that the developers simply don't have the capital to build. This simply doesn't stack up against reality. In a world of zero interest rates, capital is on a global hunt for a return. We have seen the fruits of this in Dublin's office sector, where half a million square metres are currently being built - with the same again ready to be built once the first chunk is occupied.
The high cost of housing is now a barrier to inward investment, to emigrants returning with skills, to people hoping to start families and who want to move. We’ll see that soon in lost growth and a falling birthrate. For those struggling to pay rents or unable to find homes, the risk is not in the future, but now.
Homelessness in Ireland has nearly quadrupled in the last five years, according to the government. Official figures for May showed 10,253 homeless people, including 1,700 families with 3,749 children. Many more, who emigrate or move in with parents or friends, go uncounted. Even those who can afford their rents find that they have little security in a rising market. Leases can be for as little as six months, and Irish law allows landlords to evict tenants if they want to sell the property, renovate it or move in a family member.
Much of the anger in Ireland has focused on foreign-owned companies like Ires Reit, whose largest shareholder is a Canadian company, or Kennedy Wilson, a California firm, that have bought or built thousands of units in a few years and are expanding their holdings, while paying little or nothing in Irish taxes.It now costs far more to rent than to pay off a mortgage. The property website daft.ie recently reported that the monthly mortgage payment on a two-bedroom house in the city of Cork would be about €700, but the same house would cost almost €1,300 to rent.
Despite such high demand for housing, new construction continues to lag, depressed by tight mortgage lending, high building costs and land-hoarding by speculators.While the government estimates that 30,000 to 35,000 new housing units are needed annually, in June the investment firm Goodbody Stockbrokers predicted that only 21,000 would be completed this year.
The government started a “Rebuilding Ireland” program three years ago, with a goal of ultimately adding 25,000 units a year to the housing supply. That goal is not being met, and even if were, critics say it is not enough, and rents continue to rise. Mr. Varadkar has called for looser mortgage lending rules but has warned that a more aggressive building campaign could repeat the boom-and-bust cycle that led to the 2008 crash.Lorcan Sirr, a lecturer in planning and housing at the Technical University Dublin, said that if long-term renting was to be commonplace in Ireland, the country would need price controls and new rules making leases more secure.
Ireland's housing woes can be summarised adequately by the phrase 'plenty of people, not enough homes'. The country enjoys a rapidly growing population. This is due to a substantial surplus of births over deaths, something that most other high-income countries would love to have. It is also due to net migration, again a symptom of economic success. Taking into account the various sources of demand, it is clear that the Greater Dublin Area needs at least 1,200 new homes a month - and probably more if it enjoys sustained net migration. But over the last five years, it has seen about one quarter of this level of activity.
One clear policy failure is the dereliction of duty on the part of government, both central and local, to provide social housing. It is simply not credible to expect the market to provide housing for people with incomes so low they can't cover the cost of building their home.The cost of new social housing should be borne by all members of society, not delegated to the inhabitants of new homes.
One argument is that the developers simply don't have the capital to build. This simply doesn't stack up against reality. In a world of zero interest rates, capital is on a global hunt for a return. We have seen the fruits of this in Dublin's office sector, where half a million square metres are currently being built - with the same again ready to be built once the first chunk is occupied.
The high cost of housing is now a barrier to inward investment, to emigrants returning with skills, to people hoping to start families and who want to move. We’ll see that soon in lost growth and a falling birthrate. For those struggling to pay rents or unable to find homes, the risk is not in the future, but now.
Homelessness in Ireland has nearly quadrupled in the last five years, according to the government. Official figures for May showed 10,253 homeless people, including 1,700 families with 3,749 children. Many more, who emigrate or move in with parents or friends, go uncounted. Even those who can afford their rents find that they have little security in a rising market. Leases can be for as little as six months, and Irish law allows landlords to evict tenants if they want to sell the property, renovate it or move in a family member.
Much of the anger in Ireland has focused on foreign-owned companies like Ires Reit, whose largest shareholder is a Canadian company, or Kennedy Wilson, a California firm, that have bought or built thousands of units in a few years and are expanding their holdings, while paying little or nothing in Irish taxes.It now costs far more to rent than to pay off a mortgage. The property website daft.ie recently reported that the monthly mortgage payment on a two-bedroom house in the city of Cork would be about €700, but the same house would cost almost €1,300 to rent.
Despite such high demand for housing, new construction continues to lag, depressed by tight mortgage lending, high building costs and land-hoarding by speculators.While the government estimates that 30,000 to 35,000 new housing units are needed annually, in June the investment firm Goodbody Stockbrokers predicted that only 21,000 would be completed this year.
The government started a “Rebuilding Ireland” program three years ago, with a goal of ultimately adding 25,000 units a year to the housing supply. That goal is not being met, and even if were, critics say it is not enough, and rents continue to rise. Mr. Varadkar has called for looser mortgage lending rules but has warned that a more aggressive building campaign could repeat the boom-and-bust cycle that led to the 2008 crash.Lorcan Sirr, a lecturer in planning and housing at the Technical University Dublin, said that if long-term renting was to be commonplace in Ireland, the country would need price controls and new rules making leases more secure.
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