Lecture Notes: Ireland's Housing Crisis and Economic Impact

Overview

• Most Expensive City: Dublin is the most expensive city in Europe, surpassing cities like London, Paris, and Oslo.
• Key Issue: 60% of Irish people cite housing as a major issue compared to 10% across the EU.

Economic Context

• GDP Per Capita: In 2023, Ireland had the highest GDP per capita globally.
• Wage Growth: Irish wages have not kept pace with GDP growth, lagging behind housing costs.

Housing Crisis Details

• House Prices:
  • Over the last decade, Irish house prices have more than doubled (127.5% increase).
  • House price-to-income ratio rise: Dublin's ratio increased from 3.7 (2013) to nearly 6 (2021).
  • National median house price is €370,000, 7.7 times the average income of €48,000.
• Rent Prices:
  • Rents increased by 100% from 2010 to 2023, third highest in Europe.
  • Average rent is nearly €1,500.
  • Rent control laws are poorly enforced, with many landlords ignoring them.

Impacts of the Housing Crisis

• Social Issues:
  • Increased poverty and homelessness.
  • Eviction policies contribute to housing instability.
• Economic Disparities:
  • Wage growth (27%) significantly lower than rent increase (100%).
  • High rate of young adults living with parents (66%).

Causes of the Crisis

• Stagnant Wages:
  • Wages lower than in 2009, falling below EU average.
• Institutional Investors:
  • Post-2008, increased investment by funds in Irish properties.
  • Tax exemptions encourage fund investments, increasing house prices.
• Lack of Social Housing:
  • Inadequate social housing supply with a steadily increasing waiting list.
  • Historical programs allowed sale of social housing, reducing availability.
  • Post-2008 construction collapse halted new developments.

Political Consequences

• Anti-Immigrant Sentiments:
  • Blame on migrants for housing pressure, though policy is the main cause.
• Rise of Sinn Féin:
  • Political focus on housing, economic issues.
  • Proposed policies: rent freeze, eviction bans, increased social housing.

Conclusion

• Housing bubbles are complex and difficult to manage.
• Without significant changes or a crash, the crisis is unlikely to resolve soon.

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