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LAST WEDNESDAY, HOLLY Cairns made a strong opening address as the new leader of the Social Democrats.
Perhaps the most thought-provoking claim during her first Leaders’ Questions was that she comes from the first generation that will be worse off than its parents.
This immediately drew both strong support and criticism on Twitter, much of it with the unshakable confidence that can only be achieved within a 280-character limit.
The reality, as so often, is much more complicated.
On paper, Irish millennials should be dramatically wealthier than their parents were at the same age.
In 1970, Ireland had just over half the income per head of neighbouring countries.
In 1990, the ratio had risen to about two-thirds. The boom from 1994-2000 was so extraordinary that by the turn of the millennium Ireland had caught up. This was totally unlike the unsustainable property boom that followed.
The gains of the 1990s were real and transformative. There has been nothing like it in Western Europe in the past half century.
The benefits are visible across a whole range of metrics. Life expectancy is seven years higher than it was in 1990. The infant mortality rate has fallen by over 60% in the same period, and by 90% since 1960.
These improvements are as meaningful as it gets.
Irish people enjoy access to a range of consumer goods that would have been unimaginable a generation ago. Of course, almost all of this technology has been developed elsewhere, but as a richer society we are much better positioned to benefit from it. This is as true of medicines as it is of smartphones.
But the obvious and immediate way that the assertion is correct is when looking at housing so it is hard to disagree with Cairns in this area.
According to the Central Statistics Office, Irish house prices surpassed their 2007 peak last year, something which once seemed unthinkable.
There are endless explanations offered for the inexorable rise, which is far from unique to Ireland. Shameless objections to new buildings have certainly played a role, as have 14 years of massive undersupply.
The most difficult factor to explain, however, is construction costs.
A 2020 study by the Society of Chartered Surveyors found the total cost of building a new three-bedroom house in the greater Dublin area to be €371,311, an increase of €40,000 over the 2016 figure.
Only €60,823 of this was attributable to land, meaning that the cost of building would be well over €300,000 even if land was free.
This is totally unaffordable for many families. The core of the problem is not just planning objections or even lack of supply.
Technological advances have made almost all products cheaper relative to wages. Over the long-run, the extent of this is vast. A famous example is artificial light, which went from being the preserve of the wealthy to fantastically cheap.
For whatever reason, housing seems immune, and has for decades.
This is sometimes attributed to higher building standards, but the prices commanded for unmodernised old houses should dispel any notion that this is a primary concern of home-buyers (those who can afford to, pay modern, high prices for these old standards as the market demands).
I am going to do something almost unprecedented in the history of opinion pieces here and admit that I don’t have the answer.
Nor, apparently, do any of the political parties.
But at the very least we should expect more honest effort to ask the right questions. Far more housing supply is needed, but as long as building costs remain high, prices will still stabilise beyond reach for many.
Cairns went on to talk of ‘a fairer Ireland- where it’s easier for people to get by. Where
keeping a roof over your head, or putting meals on the table, isn’t such a struggle for so
many people’.
The good news is that household surveys show that far fewer people are struggling to make ends meet than they were a decade ago. The bad news is that the housing crisis has made forming new households far more difficult.
The traditional solution for left-wing political parties to an equity issue is redistribution:
taxing the wealthy to give benefits or breaks elsewhere.
Unfortunately, the housing issue is just too big to fix without doing something really radical. The crisis is so pressing that all other advances will count for very little until we solve it.
Any party, regardless of its outlook, that wants to tackle housing properly will need creativity, serious intellectual firepower, and the political courage to face down the vested interests that will be disturbed by any change to the status quo.
It will also need an electorate with the wisdom to reward these attributes, rather than balking at the first sign of discomfort and reverting to short-term individual interest.
Ciarán Casey is an economics lecturer at the University of Limerick. He is author of ‘The Irish Department of Finance, 1959-1999′ (IPA, 2022) and ‘Policy Failures and the Irish Economic Crisis’ (Palgrave MacMillan, 2018).
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Why can’t an independent root and branch analysis be done on the cost of building a house and where the extra costs – not land -have come from?
@Damon16:
VAT @13.5% on current average house cost of €305,000 = €41,175 .. Yep!
No VAT in any other country! Yep.
37% of the cost of a home in Ireland is artificially bolted on by Gov and Local Authorities.
No one can solve the Housing Debacle until the Referendum on housing is passed.
— No one!
———————
Construction costs make up less than half the total of building a new home in the capital, a new report has found.
According to the report by the Society of Chartered Surveyors Ireland (SCSI), the average cost of building a three bedroom, semi-detached house in the greater Dublin area is €330,000.
The construction costs – or “hard costs” – came to €150,000, amounting to less than half (45pc) of the total cost of building the house.
The remaining €180,000 consists mainly of “soft costs” such as the land and acquisition costs of €57,000 (17pc of total), VAT of €39,000 (12pc) and a margin of €38,000 (11pc).
@Neuville-Kepler62F: That’s why we’re the opus dea of nations. it’s unrelentingly infuriating that every way you turn your ‘neighbour’ is standing in the way, saying no and demanding money.
And there it is right there “the political courage to face down the vested interests that will be disturbed by any change to the status quo” .. none of them have the b’s to do this, I’m sure because they are partly interested themselves!
Like the family, everything is relative.
The difference between now and the 1970s is that in 1970 our population was around 3million and thousands of young people left Ireland to work abroad and did not come back.
Today the population is 5 million and thousands of people are coming into the country every year and they are settling here.
If we had allowed high rise in our city centre (docklands/ifsc/eastpoint) 20 years ago we would not have the problem we do now. Its not too late but complete overhaul of dublin council planning policy structure is needed.
University students and young people have nowhere affordable to live. Rents and house prices are inaccessible. Young adults should not have to live at home. There should be choice and there is none.
Yes young adults have it worse than their parents.
And we are seeing the impact that this has on being able to “leave the nest”. Who really wants to live at home with their parents at age 30? No one should have to.
Ciarán Casey .. you are so right .. For whatever reason, housing seems immune to technological progress!
- Housing has remained immune from the inexorable technological progress in reducing the cost of all other products in society. We still have a guy, a trowel, a lump of mortar and a concrete block. No modern fabrication techniques … no professionals involved in the business! .. could this be the reason?
- Solving it will need creativity, serious intellectual firepower, and the political courage to face down the vested interests that will be disturbed by any change to the status quo – and they are many.
- also need an electorate with the wisdom to support doing the right thing! … a tall order indeed!
I absolutely agree — all other advances will count for very little until we solve the Housing Debacle.
Conclusion: No one, but no one can solve the Housing Crisis until A Referendum on Housing is passed.
That will clear the way for all the sane, obvious, adult things that need to be done and will dilute all the opposing forces (of which there are many!).
@Neuville-Kepler62F: Passing a referendum that gives everyone a right to a house would also give everyone in the EU a right to a house if they came here
Do you really think that Ireland has the resources to house 400 million people.
@Roger Bond: Sorry Roger, the Referendum on Housing will give NOBODY a right to a house.
If the Referendum is passed it will enable Government to implement all the sane, obvious, adult initiatives, to deliver affordable ‘owner’ homes (37% OFF the current price), that keep being blocked by the Attorney General because of the daft Irish Constitution – see French, German, Dutch, Swedish etc .. Constitutions where property rights are balanced with the right to build / common good.
Why can’t we get an honest description of the author of this piece, he is clearly a far-right neo-liberal vainly trying to hide in sheep’s clothing.
have your say