Chronic Lack Of Apartments Underlines Dublin’s Housing Shortage
A chronic lack of apartments and flats in Dublin is a root cause of the city’s ongoing housing crisis, Trinity College Dublin’s associate professor of economics Ronan Lyons said.
Speaking at Bisnow’s State of the Market event in Dublin last week, Lyons said that the city had diverged from its European contemporaries and had a disproportionate amount of family homes compared to flats.
Ireland is bucking the trend of many EU countries with the highest birthrate and lowest death rate of the EU27. Dublin in particular set to see a rise in young people looking for homes in coming years who will both hit the workforce and seek either single-person apartments or shared flats.
“Out of all the countries in the EU Ireland is the outlier," Lyons said. "In the U.S. around half of housing is in apartments and half in homes to buy.
“In fact you find that the Shetland Islands has more apartments per head than Ireland.”
Lyon’s comments come as Ireland looks to see a growth in its young population over the coming decade, which is expected to put a further strain on the country’s housing market.
Ireland’s Central Statistics Office said that Ireland’s population stood at 4.74 million in 2016. It predicted that under the most ambitious scenario Ireland’s population could grow by 41% by the middle of the century to 6.7 million people. The estimate would see an annual population growth rate of 0.8%.
Daft.ie’s fourth quarter property market report said rents in Dublin city centre had risen by 7% to €1,996 in the last quarter of 2021 compared to 2020. Dublin City South had risen 8% to €2,145 and South County by 8% to €2,258 year-on-year.
“You can see Dublin has gone from being roughly in line with other places to be one of the most expensive cities in the world in which to build apartments," he added.
“What I think is missing is in terms of providing the right answer, and one or two person households are going to dominate the net additions to our population over the next 30 or 40 years.
“If I was housing minister this is where I would be focussing my efforts. If you can solve that, you solve not only market rental [issues] but also social housing level and owner-occupier and viability levels.”
Lyons noted that among the reasons Dublin isn’t building a new raft of apartments is that the cost of construction is higher than comparable cities globally.
Despite the affordability issue in Dublin’s residential market, investment activity in the past year has stayed strong.
PwC Director Sinead Lew said that as a whole, the Irish real estate market had shown a remarkable rebound in terms of activity levels and investment in 2021.
“Despite the disruption and the challenge of Covid-19 posed for businesses and personally for all of us, over the last two years what we've seen from real estate and the Irish real estate like this is remarkable resilience in terms of being an asset class and how it's performed," she said.
“This is largely driven by strong economic performance and search for yield in investment opportunities.”
PwC’s and ULI's recent Emerging Trends in Real Estate Europe 2022 said Dublin is the fifth busiest real estate market in Europe, with €3B invested in the year to the end of Q3 2021.
Echoing Lyon’s earlier comments Round Hill Capital’s Managing Director John Vaudin said: “Ireland’s highly educated population is among the youngest in Europe. Ongoing and significant demand for professionally managed rental, residential rental property won't change.”
Vaudin highlighted a number of issues such as inflation, constrained land supply, political framework, the availability of debt and planning as long-term issues which need to be considered for any assessment of Dublin’s real estate future.
“Now if we can manage all those issues and not get carried away with ourselves, I think investors will continue to love that thesis that is Ireland," he said. "But there also a fragility around that you always have to be very careful about how we move forward.”
