Ireland’s Housing Crisis: A Threat to Economic Growth and Social Stability

Weekly client briefing

Within Lotus HQ, we are not prone to catastrophising, however, Ireland’s housing crisis has evolved beyond a shortage of homes; it now threatens to undermine the country’s economic prosperity and social fabric. The most recent bout of data releases paint a picture of a county unable to forecast the consequences of rapid population growth and inadequate housing supply. At the heart of the issue lies a stark imbalance: Ireland’s population is growing at a rate that dwarfs its ability to provide new homes. According to a study by Savills Ireland, for every new housing unit delivered between 2015 and 2023, 3.8 people were added to the population. This ratio is significantly worse than other advanced Western nations, including Spain (3.4:1) and Canada (2.9:1), and nearly double that of Australia (1.9:1).

This population-housing mismatch is not just a statistical anomaly; it is a potential brake on Ireland’s economic engine. With a population growth rate of 1.5 percent per annum, on par with Canada and Australia, Ireland is attracting talent and investment, however, the housing shortage threatens to choke this growth. As John Ring, director of Research at Savills, points out, “At present, we are running to stay still and a more aggressive approach to promoting new housing supply is warranted compared to our peers”.

In addition to reshaping Ireland’s demographic landscape, with young professionals delaying major life decisions or emigrating, the housing crunch is exacerbating income inequality. While incomes have grown by 27 percent between 2015 and 2022, house prices have surged by 66 percent. This widening gap is creating a new class divide between property owners and those locked out of the market. The most recent Society of Chartered Surveyors Ireland (SCSI) data illustrates this divide starkly: a couple with a combined income of €107,000 and a 10 percent deposit can afford to buy a three-bed semi-detached house in only one of five counties studied, and only with government support schemes. Something is very wrong here, but what can the industry do?

Construction activity is picking up, with nearly 52,000 new home starts recorded in the 12 months to the end of May. However, estimates of annual housing needs range from 35,000 to as high as 85,000 units, indicating that current efforts, while improving, still fall short. Given the current political landscape and the inevitability of a national election in the coming months, it has never been more important for homebuilders around the country to use their voices to input to policy-making, ensuring an appropriate, industry-informed approach to ramping up the delivery of much needed new home nationwide.

Ian Lawlor
086 3625482

Managing Director 
Lotus Investment Group