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I CONSTRUCTION
IRELAND’S
HOUSING CRISIS Brian O’Connell says housing provision is critical to Ireland’s economic competitiveness.
D
espite concerns over the effect of Brexit, Ireland’s economy has steadily improved since the 2008 crash. Unemployment has been in decline since 2012 and Ireland has enjoyed one of the fastest growth rates in the EU. The Bank of Ireland hiked its GDP growth projections for 2017 and 2018 commenting that “the overarching narrative regarding the Irish economy remains one of an ongoing recovery in domestic demand, reflected in solid consumer spending and construction investment in particular.” However that recovery is unevenly spread and economic optimism continues to be soured by a growing housing shortage. This is partly the result of underinvestment in housing by successive Irish governments. State spending on housing fell from more than 3% of GDP in 2001 to 1% in 2015. Consultants Deloitte have warned that the housing crisis has the potential to become the biggest constraint on Irish economic growth and could limit Ireland’s ability to
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Economic optimism is being soured by a housing shortage
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attract inward investment, particularly from the UK in the wake of Brexit. In the private sector the number of housing units for sale is critically low and is fuelling house price inflation, particularly in Dublin. According to estate agents Sherry Fitzgerald, supply fell 9% to 25,100 units in the 12 months to July 2017. That is about half the number of units advertised for sale in July 2010. Many vacant properties are unsuitable either because of their size, condition or location. Houses on so-called ghost estates remain unfinished, a legacy of the postCeltic Tiger crash. In a finding which was criticised by some local authorities as a gross overestimate, the Central Statistics Office quoted a 2016 census finding that there were more than 183,000 vacant dwellings in the Republic. However the CSO’s analysis also suggested the number of vacant dwellings was low in Dublin, where housing demand is highest. Added to that, the nature of Ireland’s housing market has changed. Demand for traditional three bedroom semi-detached houses has decreased and been replaced by a requirement for more apartments. Ireland’s Housing Agency says the number of houses being built increased by nearly 20% in 2016. But to meet current demand Ireland will need at least 81,000 new homes by 2020. Back in 2006, at the peak of the building boom, Ireland built 90,000 units in one year. That boom ended with many families unable to pay their mortgages and today in Ireland there are almost 92,000 people on housing lists and 7,000 homeless people. Pressure is increasing for greater provision of social and affordable housing. Calls for action to stem the crisis have controversially included the return of bedsits (which were banned in Ireland four years ago) and the transformation of the National Asset Management Agency (NAMA) into a government-owned housebuilder (which drew objections from some of Ireland’s biggest developers). NAMA had been originally set up in 2009 to take over property loans from Ireland’s banks which were threatened with insolvency.