Ireland house prices could continue rising for the near future, the Economic and Social Research Institute (ESRI) has warned the Oireachtas Committee on Budgetary Oversight.
This is mainly due to low investment and rapidly increasing population, causing demand to overtake supply. According to Ireland's Central Statistics Office, only 66% of Irish houses are owner-occupied, a significant fall from about 79% in 1991. Data from the Residential Tenancies Board and ESRI estimate the average Dublin rent now to be about €2,102.
In its opening statement, the ESRI, said, "Ireland was among the countries with the lowest investment in housing in the EU in 2022, only exceeding Greece, Poland, and Bosnia and Herzegovina. As a result, the rise in house prices and rents is likely to continue, albeit at a slower pace in the case of house prices."
Early on this year, ESRI, said: "It is almost certain that existing targets for housing supply understate need, given the stronger than expected increase in the population shown by early results from the 2022 Census. Hence, higher output will be needed."
One of the biggest reasons why Ireland is facing a housing crisis is due to lower investment as the economy is still reeling from the effects of the pandemic, high inflation and weaker economic growth. Higher interest rates have also contributed to more developers hesitating to take on too much debt. This has led to several housing projects being either halted midway or postponed.
Regulatory changes following the financial crisis, as well as zoning restrictions have also severely limited the availability of affordable housing, hitting low- and middle-income earners the worst. This has in turn contributed to rising homelessness and rapidly increasing rents and mortgages.
The impact of the Irish housing crisis can also be felt on the country's business and productivity sectors, with several choosing or being forced to move out of urban cities, or the country altogether in search of affordable housing. This could be devastating on the competitiveness of the country, especially when it comes to attracting foreign investment and companies.
ESRI research professor Kieran McQuinn said about the crisis: "Certainly it is impacting on competitiveness in the economy. You are hearing a lot of information about multinationals raising it as an issue, and raising it as a fairly significant issue from their perspective.
