Property Market Prices: Ireland Housing Crisis
- A recent analysis reveals a stark reality for the majority of Irish income earners: the housing market,both for rent and purchase,is largely inaccessible without government intervention.This article explores...
- According to Cormac O'Rourke, chair of the Land Development Agency (LDA), up to 70% of income earners in ireland are effectively priced out of the housing market.
- The analysis, presented at the Dublin Economics Workshop, focuses on the middle income cohort earning between €45,400 and €63,400 per year.
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Ireland’s Housing Affordability Crisis: 70% of Income Earners Priced Out
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A recent analysis reveals a stark reality for the majority of Irish income earners: the housing market,both for rent and purchase,is largely inaccessible without government intervention.This article explores the scope of the crisis,contributing factors,international comparisons,and potential pathways forward.
The Scale of the problem: A Two-Tiered Market
According to Cormac O’Rourke, chair of the Land Development Agency (LDA), up to 70% of income earners in ireland are effectively priced out of the housing market. This means individuals in the bottom six income deciles – those earning up to €68,400 annually – require state support to afford either renting or buying a home.
The analysis, presented at the Dublin Economics Workshop, focuses on the middle income cohort earning between €45,400 and €63,400 per year. For this group, the average national rent exceeding €2,000 per month consumes over 35% of their net income. Furthermore, the standard mortgage lending rule of four times income doesn’t cover the current average house price of over €422,000.
Data Breakdown: Income vs. Housing Costs
To illustrate the affordability gap, consider the following table:
| Income Group | Annual Income | Max. Affordable Mortgage (4x Income) | Average House Price (nov 2023) | average Monthly Rent | % of Net Income (Rent) |
|---|---|---|---|---|---|
| Decile 1-6 | Up to €68,400 | Up to €273,600 | €422,000+ | €2,000+ | 35%+ |
| Middle Cohort | €45,400 – €63,400 | €181,600 – €253,600 | €422,000+ | €2,000+ | 35%+ |
Source: Land Development Agency presentation to the Dublin Economics Workshop, November 2023.
these figures demonstrate a significant disconnect between earning potential and housing costs,highlighting the need for intervention.
International Context: Ireland Isn’t Alone
While the situation in Ireland is dire, it’s not unique. O’Rourke noted that Ireland’s affordability challenges mirror those in Germany, the Netherlands, and the UK. This suggests systemic issues affecting housing markets across Europe, driven by factors like limited supply, increased demand, and rising construction costs.
However, it’s crucial to note that the severity of the crisis varies.