In 2022, Ireland’s housing market became the most expensive in the European Union, with house prices soaring a staggering 77% above the EU average. This has led to a decline in home ownership rates, particularly among young people, and has also contributed to a collapse in support for mainstream political parties.
The increasing cost of housing has become a pressing issue for Ireland’s residents, impacting their standard of living and challenging the country’s political and social structures.
Despite the high cost of housing, just under 69% of the population in Ireland owns their own homes, a rate that is comparable to France, Austria, and Denmark. However, the escalating cost of housing has made it difficult for many to afford a home, leading to an increasing number of individuals and families renting for longer periods or living with their parents well into adulthood.
This trend has significant implications for Ireland’s economy and society, as it affects not only the housing market but also employment, education, and family structures. In this article, we will explore the factors contributing to Ireland’s housing market’s high cost, compare it to the EU average, and examine its impact on the country’s residents.
Housing Costs and Affordability
Housing affordability in Ireland is below the EU average, with the increasing cost of housing leading to a collapse in support for mainstream political parties and making it difficult for young people to own their own homes.
The housing market in Ireland has experienced a sharp increase in prices in recent years, with house prices 77% above the EU average in 2022. Rents have also increased by 63% over the same period, with the overburden rate in urban areas at 6.9% in Ireland compared to the EU average of 11.8%.
The imposition of Central Bank lending limits has contributed to declining home ownership rates, with just under 69% of the Irish population owning their own homes and 31.3% being tenants.
The stability of rental prices and stronger legal protections for tenants compared to Ireland are reasons for low home ownership rates. Despite these challenges, the housing market in Ireland is not stretched in terms of affordability, as Eurostat data indicates that housing affordability in Ireland is still below the EU average.
Home Ownership Rates
The proportion of individuals who possess their own homes in Ireland is comparable to that of several other European nations, yet lags behind the rates seen in nations such as Spain, Italy, Belgium, and the Netherlands. Just under 69% of the Irish population own their homes, while 31.3% are tenants. Home ownership rates have been declining in recent years, and the introduction of Central Bank lending limits has been a contributing factor.
Despite this decline, home ownership rates in Ireland are still at the same level as France, Austria, and Denmark. However, former Eastern bloc countries and Southern European nations have higher rates of home ownership. The imposition of Central Bank lending limits has led to more people renting in Ireland, which has contributed to the country’s high rental costs.
Factors Contributing to Cost Increase
Several factors have contributed to the significant increase in housing costs in Ireland compared to other European countries. One of the primary factors is the lack of housing supply to meet the growing demand. The construction industry in Ireland has not been able to keep up with the demand for housing due to various reasons, including the 2008 economic recession, strict planning regulations, and a shortage of skilled labor. As a result, there is a shortage of affordable housing in urban areas, which has contributed to the high cost of housing. Additionally, the availability of credit and low interest rates have led to an increase in demand for housing, which has further driven up prices.
To understand the factors contributing to the cost increase in Ireland’s housing market, a 2 column and 5 row table in markdown format is provided below:
| Factors Contributing to Cost Increase | Explanation |
|---|---|
| Lack of Housing Supply | The construction industry in Ireland has not been able to meet the growing demand for housing due to the 2008 economic recession, strict planning regulations, and a shortage of skilled labor. |
| Availability of Credit and Low Interest Rates | The availability of credit and low interest rates have led to an increase in demand for housing, which has driven up prices. |
| Urbanization | The increasing urbanization of Ireland has led to a concentration of demand for housing in urban areas, which has contributed to the high cost of housing. |
| Foreign Investment | Foreign investment in the Irish housing market has led to an increase in demand for high-end properties, which has driven up prices in some areas. |
| Government Policies | Government policies, such as the Central Bank lending limits, have contributed to declining home ownership rates, which has increased demand for rental properties, further driving up the cost of housing. |
Comparison to EU Average
Comparing home ownership rates in Ireland to other European countries reveals a similar trend to countries that traditionally have high levels of renting. Despite having the same percentage of home ownership as France, Austria, and Denmark, Ireland has more people renting and fewer people owning their own homes than the EU average.
The imposition of Central Bank lending limits has been a contributing factor to declining home ownership rates in Ireland. Additionally, the stability of rental prices and stronger legal protections for tenants compared to Ireland are reasons for low home ownership rates.
However, the housing market in Ireland is not stretched in terms of affordability. The Eurostat data indicates that the housing market in Ireland is not stretched in terms of affordability, despite being the most expensive in the EU. This suggests that there are other factors contributing to the high cost of housing in Ireland, such as limited supply, high demand, and a lack of government intervention in the market.
Addressing these factors may be the key to making housing in Ireland more affordable and accessible to all.
Impact on Society and Politics
The skyrocketing cost of housing in Ireland has left many young people feeling locked out of the market, with some resorting to living in cramped and unsuitable conditions or facing long commutes to work. This has had a significant impact on Irish society and politics, with declining home ownership rates leading to a collapse in support for mainstream political parties.
The inability to afford a home has also created a sense of frustration and disillusionment among young people, who feel that the system is stacked against them. The impact of the housing crisis on Irish society has been particularly acute for those on low incomes or with unstable employment. Many are forced to rely on social housing or rental assistance from the government, while others struggle to pay rent or mortgage payments on a monthly basis.
The lack of affordable housing has also created a sense of inequality, with those who can afford to buy property benefiting from rising property values while those who cannot are left behind. As a result, the housing crisis has become a key issue in Irish politics, with political parties vying for votes by promising to tackle the issue of affordability and access to housing.
