Guest Blog: Housing across the island of Ireland

Housing concerns across the island of Ireland

As we emerge from COVID-19 lockdowns, many households across the island of Ireland are in a fragile situation as pre-pandemic issues return. Here, Paddy Gray, Professor of Housing, reflects on some of the most pressing housing issues on both sides of the border.

1. Housing supply and affordability

It is hard to estimate what the fallout from COVID-19 will be as governments on both sides of the Irish border switched to crisis management as a means of mitigating against its effects.

As we emerge from lockdown and the policy environment changes, we need to be aware of the fragile situation many households will find themselves in as pre pandemic issues return.

Issues around housing affordability and housing supply will be of particular concern.

It would be difficult to discuss all of the concerns around housing on both sides of the border, and there are many, but I want to look at a few more pressing ones.

Prior to the pandemic housing issues were more of concern in Ireland than in Northern Ireland (NI). There has been a chronic lack of supply particularly, but not exclusively, in urban areas like Dublin, Cork and Galway.

Box 1: House prices in Ireland

Both house prices and rents have risen substantially since the Financial Crash. According to

  • The listed price for an average home is currently €303,000
  • €412,000 in Dublin
  • €254,000 outside of Dublin.

The standard average private rent across Ireland stood at €1,256 in Q4 2020 according to the RTB Rental Index whilst in Dublin it stood at €1,745.

The Economist magazine, cited in the Irish Times in May 2021, predicted that by 2023 Ireland will be the top performer of 16 global housing markets it has analysed, including the USA, UK, Australia, France and Germany. Whilst this might be good news for some.

It will further exclude many from having a secure decent home at an affordable price, whether for renting or for buying. MyHome data, just released, for the second quarter of 2021 suggests that the Irish housing market is red hot with price inflation running into double digits for the first time since 2018. It states that asking price inflation is now running at 12.9%, (10.6% in Dublin and 13.6% in the rest of Ireland).

House prices and rents

Rent inflation has also been of concern.  According to the Economic and Social Research Institute (ESRI), one in three households in the private rented sector (a sector that had doubled proportionally in the past 20 years) did not have enough income after rental payments to cover a minimum standard of living expenditure.

A study by the Residential Tenancies Board (RTB) in July 2021 found that more than half of Irelands tenants are paying more than 30% of their take home pay on rent. In Dublin the figure is  64% with one in five spending more than half their income on rent.

The average price of a house in Northern Ireland is £189,853 according to the Ulster University, Quarterly House Price Index Q1 2021, up 6.9% than the equivalent period in 2020, defying predictions of a downturn caused by the pandemic.

This has been the biggest annual rise since 2016. Ulster Bank suggests that this has been fuelled by the ‘race for space’ with households looking to trade up to larger homes with more space.

According to the Nationwide, buyers purchasing before the stamp duty holiday ended on June 30th 2021. Local estate agents point to the fact that a growing number of Northern Irish people were moving home after years spent living in Great Britain, drawn by the much cheaper house prices and the ability to work from home.

The average private rent in NI is around £674 per month which is less than two thirds that of Ireland.

Housing supply is a common issue affecting both sides of the border although it is much more acute in the South.

In the North, the government is  concentrating on meeting housing need and is currently reviewing how social housing in allocated after carrying out a fundamental review 8 years ago. It published the Consultation Outcome Report on 18 December 2020 setting out the next steps and timescales for implementation by the NI Housing Executive (NIHE).

In the South affordability is the major issue where housing is out of reach for many younger renters and buyers mainly due to high rents and deposits but also strict lending rules.

Davy Real Estate in a special report in June 2021, suggests that it’s not that Irish homebuyers are more prudent but Central Banks mortgage lending rules  have prevented a new generation of homebuyers taking on ever-higher levels of debt.

The Deputy Governor of the Central Bank of Ireland said house prices would have would have risen a further 25% had it not been for the Central Bank’s lending rules. A study by the European Central Bank (ECB) found that Ireland had the strictest Loan to Income (LTI) ratios in Europe.

2. Building homes

In Ireland  the Land and Development Agency (LDA) was established in September 2018 to borrow money and receive capital via the Irish Strategic Investment Fund (ISIF) and it is tasked with establishing a register of public land according to Davy Real Estate.

The intention being that it can work with local authorities and semi state bodies to use public land more effectively. The LDA will have first refusal on any sale of land by public bodies.

Under Project 2040 €1.25 billion of capital was committed to it by An Taoiseach, Leo Varadkar, to build 150,000 homes over the next 20 years.

No such body exists in the North and the NIHE hasn’t been building new social housing since 2003, a task that is being fulfilled by around 20 housing associations.

The availability of land has been highlighted as a problem by the NI Federation of Housing Associations (NIFHA), representing organisations managing over 53,000 homes. It calls  for a policy of prioritising surplus public sector land for housing where there is  identified need and targets for release of surplus land for housing for each government department.

3. Private rented sector

In Ireland, there have also been a number of interventions in the private rented sector including the introduction of Rent Pressure Zones (RPZs) in December 2016.

The purpose of this legislation was to limit the annual rise of rents by no more than 4% and it applied to new and existing tenancies with some exemptions. RPZs  now apply to all of Dublin and much of the rest of the country.

No such restrictions were introduced in the North.

In July 2021 the Minister for Housing in Ireland, Darragh O’ Brien, announced that future rent increases were to be capped at inflation. The new measures will see rent increases linked to general inflation and an extension of rent pressure zones to the end of 2024.

The provisions will likely take effect by mid-July 2021. The current cap of 4% on rent increases in Rent Pressure Zones will be replaced. Rents will now be linked to general inflation, as measured by the Harmonised Index of Consumer Prices (HICS) which is a model followed by EU countries.

Any rent increase will be linked to the rate of inflation at the time of a tenant’s rent review.

The level of inflation in Ireland is expected to be 1.7% this month. For tenancies outside of those areas, the current provision, which restricts rent reviews to every two years, will also be extended to the end of 2024.

In the North, whilst there is no cap on rents, in May 2021, the Assembly proposed changes around eviction periods, limiting deposits and giving councils new powers to introduce and enforce minimum energy-efficiency standards. It also proposed restricting rent increases to once per year.

4. New housing products

Both governments have proposed new products to support those who cannot afford to buy.

In the South, The Affordable Housing Bill 2020, published in January 2021, introduced a new cost rental product defining it as a new form of tenure and will place it on a statutory footing, financed by the Cost Rental Equity Loan (CREL) scheme (DHLGH, 2020).

The Minister Darragh O’Brien TD, defined cost rental as a new form of tenure where tenants pay rent that covers the cost of delivering, managing, and maintaining the homes only. He said they would be made available to middle income households.

According to the Dublin City Council Housing Observatory, a number of cost rental pilots are already in development, and “the ring-fencing of €35 million for cost rental housing in 2021 represents a tangible expression of Government commitment to the large-scale development of this new tenure in Ireland.”

In the North, in June 2019, the Department for Communities (DfC) launched a consultation on proposed changes to the definition of affordable housing. In April 2021 it’s revised definition included three products:

  • social rented housing,
  • intermediate housing for sale
  • intermediate housing for rent

All of which are for those whose needs are not met by the market.

5. Social housing

With regard to social housing both jurisdictions still have large housing waiting lists despite the efforts of Approved Housing Bodies (AHBs) in the South and Housing Associations in the North.

Box 2: Waiting lists

Republic of Ireland:

  • 61,880 people qualified for social housing support in November 2020, just 10% fewer than 2019

Northern Ireland:

  • Waiting lists rose by 10% on 2019 to 42,665 (December 2020)
  • 70% of these were classed as ‘priority applicants’

The Minister for Communities (responsible for housing) addressing the NI Assembly in November 2020 said that supply challenges in NI cannot be viewed exclusively in terms of undersupply.

The focus in meeting our housing challenges should be the provision of the right homes in the right locations. Housing is recognised as a priority area under three of the outcomes in the Programme for Government (PfG) draft Outcomes Framework. The importance of addressing housing need and housing stress was also acknowledged in the New Decade New Approach published in January 2020.

In the South government has committed to €2bn annual funding to deliver 9,500 social houses and has a target of 50,000 additionarenting,  stock by 2025.

It envisages that a combination of this funding and additional acquisition and leasing activity will help it to reach the target. In the North, the NIHE manages the Social Housing Development Programme (SHDP) budget that funds housing associations to build.

In April 2021, Communities Minister Deirdre Hargey MLA announced £162m through the SHDP  for 2021/22  an increase of £26m.  The pandemic did have an effect, however, as there were only 761 starts, 40% of target, in 2019/20 as traditionally most housing starts take place in the final weeks of the financial year.

However in 2020/21 there were 2,403 contractual starts, 30% over the target of 1850.

6. New policies

Finally there are two new policy initiatives imminent in both jurisdictions.

In the South, Housing for All is due to be published at the end of July 2021 in response to the housing crisis to date.

In the North the government launched consultation on a new Housing Supply Strategy which closed in mid-July. It is envisaged that it will cover a 15 year timeframe.

Newton Emerson writing in the Irish Times on November 5th 2020, stated that on almost every measure, Northern Ireland has better housing figures than the Republic of Ireland.

This may be true but there are issues around affordability and housing supply on both sides of the border. The pandemic has already had its effects on construction although recovery on both sides is optimistic.

Source: iStock

In the North proposals were announced in November 2020 to remove previous constraints on the NIHE by allowing it to build new housing again. This of course would be a major boost to new social and affordable housing given its asset base of more than 80,000 homes.

In the South, the Housing for All statement  will be expected to boost housing supply. However, the long-term effects of Brexit might put a spanner in the works.

Building materials are already increasing and the availability of skilled and unskilled labour for the housing supply chain may decrease as non-Irish nationals move to other areas.

Maybe its time to be thinking of an All-Ireland Housing Strategy?

I am sure this would attract some political opposition, but it might make sense to curtail house price inflation, particularly in urban areas, as well as meet housing need, particularly in areas that straddle the border.

Back to the policy makers!

For comments or feedback, contact Greg Campbell on: 


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