The Irish housing market - Where next?

Amidst the fractious and often heated public debate in Ireland on the housing market,context and key facts are often lost. We hope our latest Davy report on the Irish housing market will shed light on recent developments and the challenges facing policymakers inalleviating the shortage of accommodation.

In this Special Report, we consider familiar topics such as the impact of the Central Bank’s mortgage lending rules, the proposed equity loan scheme, institutional investment into the private rented sector and the planned expansion of the budget for social housing provision.

However, we also discuss why the cost of building homes in Ireland is high by European standards and the capacity constraints in the construction sector. Unless these difficult structural problems holding back homebuilding can be resolved, alternative policy measures will likely only provide transitory solutions.

No easy answers to Ireland’s housing dilemma

In its November 2020 report, the National Economic and Social Council (NESC) stated that Ireland must bring about a fundamental change in its system of urban development, land management and housing provision. Unfortunately, structural change is neither easy nor necessarily politically popular. After a decade of weak housing supply, the Irish public is demanding immediate action.

The Help-to-Buy scheme, proposed equity loan scheme and also those who advocate a massive expansion in the social housing budget seem to provide answers to the affordability and viability problems. Less attention is paid to the intractable problem of Ireland’s high build costs. There is also limited capacity within the construction sector. Well intended policies may ultimately prove inflationary, providing only a transitory solution to weak housing supply.