The Housing Affordability Crisis: Causes and Solutions

The Growing Problem

Ireland's housing crisis has reached unprecedented levels. With home prices rising 71% faster than wages over the past decade, a generation finds itself priced out of home ownership. This article examines the systemic causes of the crisis and offers potential policy solutions.

Key Statistics

• The average house price in Dublin has increased by 94% since 2013
• Nationwide, prices have risen by 76% in the same period
• Average wages have grown by only 19%
• Rental costs now consume an average of 47% of take-home pay for tenants

Driving Factors Behind the Crisis

1. Investor Dominance

Institutional investors and large-scale landlords now control approximately 36% of the housing market. These entities have the capital to outbid individual buyers, driving up prices and converting potential owner-occupied homes into rental properties. The financialisation of housing has transformed homes from places to live into investment assets.

2. Supply Constraints

Despite growing demand, housing construction has consistently fallen short:

• Current annual construction: ~25,000 units
• Estimated annual need: 35,000–40,000 units
• Cumulative shortfall (last 10 years): >100,000 homes

Planning delays, high construction costs, and land hoarding have all contributed to this persistent undersupply.

3. Demographic Pressures

Population growth, shrinking household sizes, and migration patterns have increased housing demand:

• Population has grown by 12% since 2010
• Average household size has decreased from 2.9 to 2.6 people
• Urban centres have seen accelerated population growth

Policy Solutions

Addressing Ireland's housing crisis requires multi-faceted intervention:

1. Land Value Taxation

Implementing progressive taxation on land holdings would discourage speculation and encourage development, making more land available for housing.

2. Public Housing at Scale

The state must return to building public housing directly, rather than relying solely on private developers. Countries like Austria and Singapore have demonstrated that public housing can be high-quality, desirable, and economically sustainable.

3. Regulation of Investment

Limiting bulk property purchases by institutional investors and implementing rent controls would help rebalance the market towards individuals seeking homes rather than investment returns.

4. Renovation and Densification

Ireland has thousands of vacant properties and underutilised urban spaces. Targeted incentives for renovation and penalties for leaving properties vacant could quickly increase housing stock.

Conclusion

The housing affordability crisis isn't inevitable—it is the result of policy choices that have prioritised property as an investment over housing as a home. With coordinated policy intervention and a fundamental shift in how we view housing, Ireland can create a more equitable housing system that serves the needs of its people rather than treating homes as financial assets.

The path forward requires political courage, but the social and economic costs of continuing the current trajectory are simply too high to ignore.