ECONOMY

Ireland unveils record spending to tackle housing crisis

Ireland updates

Ireland’s government has unveiled plans to spend a record €4bn annually on building more than 33,000 new homes a year by the end of the decade in an effort to tackle the country’s chronic housing crisis

The Housing for All plan, which was unveiled at a news conference on Thursday, also intends to eradicate homelessness over the same period.

Micheál Martin, the Irish taoiseach, called housing the “single most urgent and important social issue facing our country at this moment in time”.

“There are not enough homes being built and a generation of people are demoralised and close to despair on the issue. There is scarcely a family in the country untouched by the crisis,” he said.

Ireland’s housing problems are rooted in the high cost of construction, which has driven up sale and rental prices, and are compounded by a lack of supply and a growing population.

Many people have found themselves priced out of the market. Break-even for builders on a two-bedroom apartment is €450,000, according to a recent report by Trinity College Dublin economist and housing expert Ronan Lyons. The rental market has suffered the knock-on effects, with increased demand and lack of supply driving rents to often unaffordable levels. 

The housing squeeze is a major issue with the country’s voters and is expected to colour the fortunes of the country’s three main parties in the next general election, which is due by 2025.

“This [plan] is a political as much as an economic and social policy event,” said Dermot O’Leary, chief economist at stockbrokers Goodbody.

If the housebuilding targets are hit, “a lot of the problems should certainly be eased, but we’re a number of years away”, he said. It was also “not entirely clear that the state has the capacity, skills and experience” to pull off the plan, he added.

Backed by €12bn in funding directly from the government, the project goes well beyond previous efforts. The initiative also includes €3.5bn from the Land Development Agency, a commercial, state-sponsored body set up in 2018 to develop state-controlled land with a focus on providing homes, with €5bn from the state-owned Housing Finance Agency.

It expects 300,000 homes to be built, starting with 33,000 per year and rising to 40,000 by 2030. Before the Covid-19 pandemic, Ireland was building about 20,000 annually.

This includes about 90,000 so-called social homes for those on low incomes as well as 54,000 affordable homes, including some earmarked for first-time buyers at an average price of €250,000.

Affordable housing includes about 2,000 homes a year designated as “cost rental”, where rents are expected to be 25 per cent lower than the market rate.

“This programme comes after the original [2016] Rebuilding Ireland,” said Fiona Cormican, director of new business at Clúid Housing, an independent non-profit providing social-rented homes for people on housing waiting lists.

“This goes a step further, it has funding fully behind it and it’s long-term planning for housing. We can’t keep going into the boom-bust cycle.”

The housing association, which is Ireland’s largest, delivered the country’s first 25 cost-rental properties in August, at rents up to 50 per cent below market prices. More than 1,000 people applied for the homes, Cormican said.

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