Delivery Ireland’s Housing: A Stumbling Block for Economic Competitiveness

There is no part of Irish society that is not impacted by the housing crisis. The scale of the challenge has become something of a reason or excuse for inaction and poor decision-making at a policy level (when everything is a problem, nothing is a problem). Not only is this a problem for citizens, it is having a particularly negative effect on the nation’s attractiveness to multinational companies. 

The Economic and Social Research Institute (ESRI) recently highlighted significant concerns raised by multinationals regarding the escalating housing issue in Ireland, pointing out the detrimental impact on Ireland’s economic competitiveness. During an appearance before the Oireachtas committee on budgetary oversight, ESRI research professor Kieran McQuinn spoke of the growing problem facing the Irish housing market. With house prices on an upward trajectory, the supply levels, although improving, are insufficient to meet the combined demand of natural growth and the existing backlog. This imbalance is projected to persist, fueling further price increases.

Multinational corporations, which contribute significantly to Ireland’s economy by offering some of the highest wages, express growing unease as a substantial portion of these wages is consumed by housing costs. This situation not only strains employees financially but also poses a challenge to these companies in attracting and retaining talent, ultimately impacting their decision to invest in Ireland. The ESRI’s analysis suggests that a multilayered approach is required to address this funding gap, urging both the private and public sectors to step up. The government’s current efforts, while commendable, may not be sustainable in the long run given the magnitude of supply increase required to rectify the imbalance.

One critical part of the solution lies in diversifying funding sources for housing development, right across Ireland. Institutional funds, despite concerns over potential monopolisation of housing estates, inject necessary funding into the market. This strategy is vital to ensuring a steady and sufficient supply of housing to meet the ever-growing demand. In terms of non-institutional funding, the role of non-bank lenders – like Lotus Investment Group – has never been more important. With traditional banks constrained by post-crash regulatory frameworks, alternative lending sources are now essential to bridging the funding gap in the housing market. As an alternative lender focused on supporting home builders, our mission aligns perfectly with this urgent need. By providing a range of alternative financing solutions, we contribute to increasing the housing supply, which is an important factor in mitigating the housing crisis and restoring Ireland’s economic competitiveness. Also, the anticipation of “real wage growth”, as mentioned by Prof McQuinn, coupled with the return of household savings rates to pre-Covid norms, provides some hope of further project viability, which may, in turn, offer some relief to consumers, however, policy still have an important enabling role to play. For our part, we will consider supporting house building projects across the country; you are welcome to contact any of the Lotus team to discuss options for your next project.

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group