Exploring Ireland’s Housing Crisis
Owning a home has long been an aspiration for countless Irish people, but I think it’s fair to say that this dream is now very much out of reach for far too many.
The housing crisis in Ireland has been a persistent and pressing issue that has left a significant impact on many lives, especially those under 40. As property prices have soared, and affordable housing becomes increasingly elusive, it’s important to look at the root causes of this issue, examine its far-reaching implications, and consider potential solutions to address it comprehensively.
Cause and Effect
One of the fundamental factors contributing to the housing situation we find ourselves in is the severe shortage of available housing units, for both sale and rent. The aftermath of the 2008 financial crisis dealt a blow to construction, and since then, there has simply been inadequate investment in the construction of new housing units. This shortfall in supply has led to a situation where demand far outstrips the availability of homes.
The issue of property prices cannot be overstated. In urban centres, particularly Dublin, prices have skyrocketed to such an extent that first-time buyers face insurmountable financial barriers. A combination of factors, including speculative investment and foreign capital inflow, has inflated property values beyond the reach of many Irish people, both young and old(er).
The Irish rental market presents its own set of challenges. High rents have become the norm, pushing tenants into precarious financial situations. The proliferation of short-term lettings has squeezed out thousands of properties that would otherwise be either owner-occupied or available for long-term tenants. With all of that in play, the difficulty of saving for a +10% deposit on a home is further exacerbated by the burden of exorbitant rent payments.
“The aftermath of the 2008 financial crisis dealt a blow to construction, and since then, there has simply been inadequate investment in the construction of new housing units.”
The Irish rental market presents its own set of challenges. High rents have become the norm, pushing tenants into precarious financial situations. The proliferation of short-term lettings has squeezed out thousands of properties that would otherwise be either owner-occupied or available for long-term tenants. With all of that in play, the difficulty of saving for a +10% deposit on a home is further exacerbated by the burden of exorbitant rent payments.
Government policies also play a significant role in the housing crisis. Historically, Ireland has grappled with a lack of comprehensive long-term strategies and a delay in implementing swift and effective measures to tackle the issue. The result is a chronic housing problem that has yet to be adequately addressed.
Ripple Effect on Society
Ireland’s housing crisis is not just a statistic; it has a sizable impact on the lives of us all. The most obvious effect is the unattainability of homeownership for many. Owning a home has long been an aspiration for countless Irish families, but the dream is now very much out of reach for far too many. As has been widely commented on, this lack of affordability stifles economic mobility and drives inequality.
Another deeply concerning outcome of the crisis is homelessness. A significant number of individuals and families find themselves without a stable place to live. The sight of homeless individuals on the streets of our cities is not only a heart-wrenching issue but also a public health concern. Homelessness takes a toll on the mental and physical well-being of those affected, exacerbating an already dire situation.
“Rental stress affects the quality of life for renters and contributes to broader economic challenges.”
Rental stress is another consequence of the housing crisis. The high cost of renting in Ireland leads to financial instability for tenants, causing them to allocate a substantial portion of their income toward rent, leaving little room for savings or financial security. Rental stress affects the quality of life for renters and contributes to broader economic challenges.
On a broader scale, the housing crisis in Ireland has the potential to impact the economy. Unaffordable housing can deter foreign investment and slow down economic growth. Furthermore, the social and economic implications of a population struggling to secure stable housing cannot be underestimated.
Pathways Forward
Addressing the housing crisis in Ireland is a complex challenge that requires a multi-faceted approach. From our perspective, several potential solutions can help mitigate the symptoms and set us on a path toward a more stable housing future.
Obvious perhaps, but increasing the supply of housing is paramount. This can be achieved through a combination of public and private sector efforts, such as public-private partnerships, and incentives for developers to build affordable housing. Streamlining the planning and construction processes will be essential. This won’t come as a surprise, but by dramatically increasing the availability of housing, the supply-demand imbalance can be eased. Looking at the completion levels, things are moving in the right direction… but too slowly.
Rental regulations are another essential element. Implementing regulations on rent increases and strengthening tenant protections even further may help alleviate rental stress and provide greater stability for renters. But policy makers also need to pay close attention to how this impacts investment into the sector.
As we’ve seen recently, with the proliferation of Airbnb-type licensing, we must ensure that property owners and landlords can’t simply move to one of these platforms to circumnavigate tenant rights. Right now, we have a massive gap in the number of short-term and long-term rental properties available across the country, with 28,683 short-term lets available compared to just 2,007 traditional lettings listed on Daft.ie. We need to find a balance here.
“Our Government should focus on creating a comprehensive and long-term housing strategy that addresses the root causes of the crisis and aims to provide affordable and stable housing options for everyone in Ireland looking for a roof over their heads.”
Government intervention is vital to coordinate efforts, implement housing policies, and provide support for those affected by the housing crisis in Ireland. Our Government should focus on creating a comprehensive and long-term housing strategy that addresses the root causes of the crisis and aims to provide affordable and stable housing options for everyone in Ireland looking for a roof over their heads. The Help-to-Buy scheme first launched in 2017 has been welcomed, but has had limited success applying only to new-build homes where the market has continued to be heavily under-supplied. The introduction of RPZs in late 2016 has been successful in some aspects but again hasn’t ‘fixed’ the issue, and it could be argued had driven investment down to the lowest level seen in a decade. More recently, the Housing for All strategy aiming to significantly increase supply to the market and end all homelessness by 2030, is still in its infancy and will take time to deliver and may well be updated (or replaced entirely when a general election comes around).
Exploring innovative housing models is also crucial. Alternative pathways to homeownership, such as rent-to-own schemes and co-housing arrangements, can provide viable solutions for those who might otherwise be locked out of the property market. These innovative models offer flexibility and affordability, making homeownership more accessible.
At Homely, we see the struggle firsthand. That’s why we’re all about finding solutions for those left behind by the housing market. Our approach? A path to homeownership that works within the rules, offering hope to those stuck in the rent cycle. Take the first step today by booking in a consultation with our team now. We’re here to guide you through the process and help you achieve your homeownership goals.
Take the first step and explore your options with us.