The Dublin Housing Crisis
The Dublin housing crisis has caused much pain and anguish for prospective buyers in our nation’s capital, but what exactly is going on? How did it start? How is it affecting people? And what is the government doing to tackle it?
The crisis has its roots in the big economic crash of 2008. Back then, house prices in Ireland, and especially in Dublin, were sky high, and when the global stock market crashed, so did the Irish property market. Homeowners were sent into negative equity, owing more to the banks than their properties were worth. It was a torrid time, but there was one silver lining: houses suddenly looked more affordable.
However, as the years passed and the country dragged its way through the recession and back into growth, the property market eventually recovered to something resembling its previous, bloated form.
It may seem strange that the county finds itself in the same position as it was just 10 years before, but unfortunately, the authorities don’t seem to have learned from their previous experience. It comes down the simple fact that there is not enough supply for the county’s high demand, causing prices to push ever higher.
Why the high demand? There are a variety of reasons. First of all, Irish people have a keen affinity for house ownership. In other European countries, people are often content to rent an apartment for their entire lives, but Irish people tend to want to own a house. This creates a high demand for houses – a demand which is not being met for reasons that will be discussed later.
There is also the issue of a growing population adding to the Dublin Housing Crisis. The county’s economy is growing strongly, with large numbers of jobs available for all kinds of workers. This not only attracts immigrants from foreign countries, but it also attracts people from other Irish counties – especially from rural areas where economic opportunities are few and far between. With more people living in the city, demand inevitably swells.
But then why the low supply? If there is so much demand, why don’t property investors build more properties? Again, there are many factors behind this, but one of the most significant of these is the scarcity of credit. After the crash of 2008, lenders are holding back on the credit they give out, and without the necessary loans, new properties can’t be constructed. Investors are also more wary of potential market crashes, and many of them will only invest in something if they believe they’re guaranteed a return. With the various uncertainties in the global markets, they not inclined to risk their money.
As well as that, the government have introduced new regulations which have resulted in a large number of rental properties being left vacant. The shortage of rental properties in Dublin has caused rent prices to increase beyond their 2008 high. Recently, the government has decided to raise rent supplements in order to make rental properties more affordable, but it remains to be seen whether this helps the situation or simply drives rents even higher.
All of this has led to much anguish. Young adults are living with their parents long into their 20s, and large numbers have been left homeless, unable to afford a home and without anywhere else to go. The government is trying to tackle the situation, but at the moment the problem doesn’t look like it’s close to being solved.