Death of a Celtic Tiger: Ireland's Housing Crisis
Ireland is currently in the depths of a severe housing crisis. A fact that many might think of at odds with the country’s advanced developmental status. With its population currently at its highest level since 1851 at 5.01 million (Central Statistics Office, 2021)., Ireland’s housing crisis is a matter of immediate and growing concern.
What Caused It?
Much of Ireland’s contemporary housing woes can be traced back to the collapse of the Irish property bubble in 2007. Ireland’s economy as a whole had experienced a prolonged period of expansive economic growth between the years 1995 and 2007, earning the moniker “Celtic Tiger” (O’Leary, 2011). A term coined in homage to the four "Asian Tiger" economies of Hong Kong, Singapore, South Korea, and Taiwan. Each of which experienced comparably strong levels of economic growth from the 1960's through to the 1990's (Peters, 2021). During this time in Ireland, lax lending criteria combined with an immigration fuelled upsurge in demand created an enormous property bubble. House prices rose by an extraordinary “292% between 1996 and 2006”, with the number of new housing developments increasing by 177% in the same period (Norris and Coates, 2014).
The Irish economy found itself extraordinarily dependent on its property sector. “By 2007, construction accounted for 13.3%of all employment, the highest share in the OECD (Whelan, 2013), and by a considerable distance. With prices heavily inflated and out of sync with real market conditions, a slowdown was inevitable. As would be buyers began to baulk at excessive asking prices, a dramatic fall in property valuations followed.
Against this backdrop the 2009 financial crisis served as an unwelcome addition to Ireland’s economic woes. As it transpired, Irish banks were particularly exposed, ultimately requiring a controversial €67.5 billion EU and IMF backed bailout (Castle, 2014). A lengthy economic recession ensued, with signs of sustainable recovery taking until 2014 to finally emerge (Fitzgerald, 2014). This history is important in understanding the reticence of the Irish government in taking some of the measures required to address what has now become a full-blown housing crisis. From here, we can take a more detailed look at Ireland’s housing crisis and some potential solutions.
Build Up
Irish towns and cities are characterised by their low-rise nature as compared to many fellow developed nations. This phenomenon is perhaps best exemplified by Ireland’s capital city of Dublin. A key economic hub that has attracted a wealth of high-tech international investment with the likes of Facebook, Google and Amazon all currently in operation there. In spite of its big tech leanings and cutting edge economic profile, conjuring images of a modern metropolis, Dublin remains a remarkably low-rise City.
“The average height of a building in Dublin city centre is four to six storeys” (Ní Aodha, 2019). As compared with Paris – another famously low-rise European city – Dublin’s average building height is almost a full third lower. The end result is a city that is struggling desperately to match the extent of its own economic ambitions and to provide a sustainable cost of living for its residents. Dublin routinely ranks amongst the top 10 cities in the world by rental prices. A report by Deutsche Bank in 2019 employing the specific metric of “Monthly Rent for Mid-Range 2 Bedroom Apartment” places Dublin at number 8 in the world, ahead of the likes of Tokyo and Sydney (Reid, Nicol & Allen, 2019). A similar index compiled by UK based global real estate company Savills for the previous year places Dublin at number 2 worldwide in terms of “Mainstream Residential Rents” (Tostevin, 2018).
A 2018 Irish Government plan outlining Guidelines for Urban Development and Building appears deliberately vague and non-committal with regard to the prospect of increased high-rise property developments. While acknowledging “increased building height is a key factor in assisting modern placemaking and improving the overall quality of our urban environments.” (Department of Housing, Local Government and Heritage, 2020). No specific targets are mentioned for when more of these development types can be expected. Dublin City council have made similar noises regarding an increased openness to the development of taller residential buildings. Their appetite for a dramatic transformation of the city’s low-rise building profile appears however lukewarm at best, “Dublin City Council acknowledges the intrinsic quality of Dublin as a low-rise city and considers that it should remain predominantly so” (Dublin City Council, 2022).
Dereliction & Vacancy Tax
Given that taller residential building developments appear unlikely to be implemented anytime soon. Attention must, instead, be turned to the current housing stock in operation around the country. A recent report by Irish property data specialists GeoDirectory indicates a total of “90,158 dwellings were recorded as vacant in Q4 2021”. This equates to one in twenty Irish residential properties being currently unoccupied (GeoDirectory Residential Buildings Report, 2022), giving Ireland a vacancy rate of 9.10%, the 10th highest in the world (Murphy, 2022).
On a brighter note, the number of derelict properties in Ireland has fallen for the first time in five years. 4,805 residential buildings previously classified as derelict in 2016, have now been upgraded to “habitable” as of December 2021. 71.7% of which are now occupied (GeoDirectory Residential Buildings Report, 2022). That still leaves, a total of 22,096 currently derelict, or in other words uninhabitable. In light of these depressing figures alongside growing public pressure, the “Vacancy, Dereliction and Regeneration Bill 2022” was recently launched by the Irish government. Should this bill ultimately pass, it would see an annual vacancy and dereliction tax applied – with some exceptions – to properties matching these criteria (Vacancy, Dereliction and Regeneration Bill 2022).
A vacancy tax implemented in Vancouver, Canada in 2017 has been held up as an example of the potential effectiveness of such a policy. While the tax did succeed in reducing the number of empty properties in the city by a quarter (Murray, 2022), there are obvious issues with such a comparison. A majority of the vacant dwellings in GeoDirectory’s report are concentrated in more rural Irish regions such as Leitrim and Roscommon. Areas for which parallels with the urban surrounds of modern Vancouver are few and far between.
Ongoing Concern
Meanwhile the Irish housing crisis rolls on. A recent publication by the Irish Parliamentary Budget Office reports that while Irish wages have increased by 23% for the period of 2012-2020, house prices have risen by a staggering 77% over the same timeframe. The report further acknowledges that “Home ownership has collapsed among adults of a prime working age (25-54)” with “rising rents and surging house prices” cited as key contributing factors (Parliamentary Budget Office, 2022). The inaccessibility of the housing market to younger generations of Irish citizens has seen the term “Generation locked out” gain traction amongst the growing numbers of Irish unable to gain a foothold on the much vaunted property ladder (McCurry, 2021).
For some, the situation is even more dire. Homelessness in Ireland is currently at ongoing record levels. According to the most recently available data, a total of 9,492 people were recorded as having accessed emergency accommodation in Ireland during the last week of February 2022 (Department of Housing, Local Government and Heritage, 2022) while down slightly from a peak of 10,514 recorded in October 2019 (Kilraine, 2022). Recent increases in the price of building materials are unlikely to help proceedings. Trade complications arising from Brexit had already driven up costs significantly over recent years. These issues have now been further exacerbated by the ongoing situation in Ukraine, with E.U. sanctions having cut off member states’ access to Russian steel (Hennessy, 2022).
Conclusion
With Ireland’s population at its highest in over 170 years and growing rapidly, the problems facing the Irish housing sector are myriad. Increasing housing supply will be no quick fix but it is absolutely essential, and arguably the single most pressing issue facing the Irish State. The scars of the 2007 housing bubble remain writ large on an economy struggling to move on from its past, in spite of growing evidence of the necessity of doing so. As homeless numbers swell to alarming levels, and “generation locked out” continues to wait for its long-promised start in life. Many hope for change, but nobody is holding their breath.
References
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Image Sources
Figure 1: Boylan, B, (n.d.) Celtic Tiger, Pinterest. [Chalk Pastel] Retrieved from https://www.pinterest.com/pin/426223552205632185/
Figure 2: Verde, M., (n.d.). Dublin, Ireland. Night view of famous illuminated Ha Penny Bridge in Dublin, Ireland at sunset. [Photograph] Retrieved from https://www.planetware.com/pictures/ireland-irl.htm
Figure 3: Graham, T., (n.d.) Abandoned derelict detached house awaiting renovation on Ocean Drive, Rosslare, Ireland. [Photograph]. Retrieved from https://www.timgrahamstock.com/image/I0000Sq2hGjZOmlk
Figure 4: ‘The recession cost us all hope of saving money for our futures’ (n.d.). [Hybrid Art]. Retrieved from https://www.independent.ie/opinion/comment/claire-mccormack-our-locked-out-generation-34593827.html
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