The effect of very little new supply for either purchase or rent, but rising demand, led to the inflation of prices, increasing by 60.1% between 2010 and 2019. House prices are being suppressed by the Central Bank rules on deposits.
One of the effects of rent increases is that families who are income insecure cannot afford rent increases, and with no social housing available, these families find themselves homeless.
The Dublin Region Homeless Executive (DRHE) detail that in June 2014, 913 adults and dependents were in emergency accomodation. By November 2018, this number had risen to 4,635. Of these 848 families live in hotels and B and Bs, and 459 in other provided accommodation.
Airbnb was introduced in Ireland in 2015 with the intention of raising tourism and providing financial relief for property owners. Instead, a majority of the Airbnb rental market is owned by individuals or real-estate companies who never live there during the year. Short term rental properties, like those throughout the Dublin area, remove units from the available housing market.
On December 24 2016, Dublin was declared a Rent Pressure Zone to restrict rampant price rises and require planning permission for short-term renting and for renting out multiple properties. From January 2016 through July 2018, the number of short-term rental properties on Airbnb increased by 4610 in Dublin City, 658 in Dun Laoghaire-Rathdown, 471 in FIngal, and 254 in South Dublin. Since then, however, the number of properties has decreased in each local authority except for Fingal.
Part of these regulations were meant to curb the use of full-time rental properties. If a property is available for more than 90 days, written planning permission from DHS is required. Over time, the average number of days in which Airbnb properties were available yearly has decreased. In January 2016, the average property in each local authority was available at least 200 days of the year. The average now is around 100 days.
Planning permission is also required for homeowners renting their non-primary place of residence. But this has not deterred owners of multiple properties from short-term renting. The average number of properties on Airbnb by the same host has risen. Dublin City hosts own an average of 4.3 properties, up from 2.2 in 2016.
The four local authorities grant planning permissions to develop land for housing. In the third quarter of 2019, permissions for new developments have been proposed under a Tier 2A classification, while permissions already granted either continue or have been paused under a classification of Tier 1.
Many of those permissions are granted in Dublin City, South Dublin, and Dun Laoghaire. The area of Dublin currently being development or proposed to further develop into housing is staggering.
In theory, a lot of the right criteria for creating supply exist. There is an excess of demand; there was 6,400 acres of zoned serviced land available in the four Dublin authorities for 132,000 units in 2014 and there are a lot of outstanding planning permissions still in effect and local authorities want to give permission for developments that meet development plan/zoning criteria.
Yet despite these conditions and the need to create supply it is clear that a hangover from phase 2 of the crisis is blocking development. The state’s finances are limited, there are competing demands for scarce resources, and they are reluctant to significantly increase capital spending on housing and associated infrastructure. The banks are in a weak state and reluctant to lend for development. Builders and developers have limited initial capital to draw down additional finance. With respect to land, it may be the case that owners are reluctant to put into development because they bought it in the boom and cannot afford to develop at present housing prices. With respect to planning, it may be that developers are seeking permissions that contravene development plans or are trying to alter existing permissions. The property industry also argues that the system needs streamlining and simplifying.
The last twenty five years has seen a tumultuous set of changes with regards to Ireland’s housing sector and market. Throughout the entire period it has been transitioning through three phases of crisis.
In the first phase, there were crises of creating enough supply, very quickly rising prices to levels that were unaffordable for low and middle income households and reduced competitiveness, a significant increase in household debt and bank debt to precarious levels, over-zoning of land and dramatic price increases, the expansion of urban sprawl and long distance commuting.
In the second phase, the property bubble burst, the fallout was catastrophic for households, the state, and the wider economy. House prices plunged, estates remained unfinished, households were faced with extensive mortgage arrears and negative equity and/or poor build quality, the social housing waiting list extended, and more households became homeless.
In the third phase, instead of the market returning and fixing the problems, there has been uneven mopping up of oversupply and little new supply of housing units. This has driven up purchase and rental prices in the cities and also created rising homelessness. This present phase is likely to last a number of years and is unlikely to address issues that have persisted since the 1990s, such as housing (to buy or rent) becoming increasingly unaffordable for ordinary citizens.
This extended data story is an updated and modified version of:
Kitchin, R., Hearne, R. and O’Callaghan, C. (2016) Housing.
In Roche, W.K., O’Connell, P. and Prothero, A. (eds) Austerity and Recovery in Ireland: Europe’s Poster Child and the Great Recession.
Oxford University Press. pp. 272-289.