Up to 70 per cent of income earners in the Republic are effectively priced out of the housing market in terms of both rents and house prices, the chair of Land Development Agency (LDA) has said.
In an address to the Dublin Economics Workshop’s annual conference in Wexford, Cormac O’Rourke said earners in the first six income deciles – in other words those earning up to €68,400 per annum – could not afford the average market rent or the average purchase price of a home without State support.
He presented figures for the middle cohort of earners here, those earning €45,400-€63,400 a year.
The average market rent nationally (now in excess of €2,000 a month) was more than 35 per cent of the net income of these earners, he said. Similarly, four times their income (the amount allowable under the mortgage rules) did not equate to the average purchase price of a home in the Republic, now in excess of €422,000.
Asked whether this constituted market failure, Mr O’Rourke said the figures for Ireland roughly matched those for Germany, the Netherlands and the UK.
“There’s been a significant jump in the cost of construction,” he said, linking it to the acceleration in energy costs in the wake of Russia’s invasion of Ukraine.
In his presentation, Mr O’Rourke also highlighted long development times – on average five to seven years from land purchase to housing delivery – as another significant factor inflating end prices.
On the upside, he said the LDA would soon become the biggest supplier of new homes in the State, eclipsing publicly quoted companies Glenveagh and Cairn.
The agency, he said, was on track to deliver 2,000-2,500 new homes in 2026 and up to 3,500 in 2027.
“That is bigger than either Cairn or Glenveagh,” Mr O’Rourke said.
The LDA is currently building on about 20 sites nationally and has 24,000 housing units at various stages of planning and construction in its pipeline, he said.
These ranged “from houses in the suburbs where we’ve inherited lands from State bodies, but the vast bulk of what we do is apartment construction”.
Mr Rourke also spoke of the agency’s challenge to deliver almost 1,000 homes on the site of the former Central Mental Hospital in Dundrum in Dublin, now subject to a legal challenge.
“It’s extremely frustrating, we should be delivering 1,000 homes there this year,” he said.
“It’s very frustrating to have a situation where the State entities with the capacity to review environmental issues are quite happy with the site, and then an individual can relitigate those and hold it up,” he said.
“It’s the balance between the common good and the rights of the individual, and in the midst of a housing crisis I think the common good has to have a higher weight,” Mr O’Rourke said.
Frances Ruane, chair of the National Competitiveness and Productivity Council (NCPC), said Irish energy costs were approximately 56 per cent above the EU average, and this represented “a real competitiveness challenge”.