Panic stations, everyone! Dublin is now more expensive a place to live in than Silicon Valley!
A report out this week from employment consultancy ECA (Employment Conditions Abroad) said it was so.
Well, calm down. Breathe.
The headline issue, which is also the first bullet point on ECA’s website article on this finding (“cost of living in Dublin overtakes Abu Dhabi and Silicon Valley”), needs quite a bit of context.
Such as the fact that this is a survey intended to help employers assess the cost of relocating employees. So, it is in many ways not that relevant to people who already live in the capital. For example, a major factor in Dublin’s unwanted rise in the report’s charts is simply the rise in the value of the euro and a weaker dollar.
This single element is why, as the report also notes, not just Dublin but a full 30 European cities are in the top 100 most expensive places category. It’s also a leading reason why Dublin popped back into the top 100.
Yes, we have been there before, just four years ago, again based on various fluctuations like this, which really are more international economics issues than a problem intrinsic to Dublin or any other city so affected.
Then there’s the fact that excluded from this survey’s calculations are all the things that make Silicon Valley far more expensive than Dublin. Far. More. Expensive.
Housing, for a start. All of “Silicon Valley” (which these days seems to be defined as most of the San Francisco Bay Area, including very expensive San Francisco) is now one of the most expensive home and rental markets in the world.
One study earlier this year found that well-paid engineers at many of the Valley's top companies would struggle to afford a median priced home near their workplace.
"The median housing costs near the offices of Apple, Google, Uber and other tech giants in San Francisco was $1,203,750 (€1,021,200). Meanwhile, the median salary for software engineers at the companies we looked at within the Bay area was $210,500 (€178,600)," the study notes.
For comparison, the median cost of a house in the Dublin region is €356,000 ($418,676), according to Central Statistics Office figures out this week. Median rent in San Francisco is currently $4,650. In Dublin, it is €1,500 ($1,764).
Silicon Valley housing costs are high outside the city, too. Home prices rose 20 per cent last year in Cupertino, where Apple is headquartered. Median price for a home there is $1,163,750. Median rent within 16km of Cupertino is $3,398.
Property tax
Then there's property tax. In Dublin, that's a laughably small cost compared to much of the world, generally a few hundred euro at most. In Cupertino? It's 1.25 per cent annually, more or less, of what you paid for the house. So every single year, you'd be paying around $14,500 just in property tax.
Then in California, you have some of the highest personal, state and local tax rates in the US.
And if you don’t have health insurance included in your pay package, you’ll be paying thousands a year for it, and the older you are, the more you will pay since age is an allowable factor in calculating premiums. In your 50s? You could well be facing $700 for health insurance in Silicon Valley. Per month.
So what are the considerations that make Dublin more expensive than Abu Dhabi and Silicon Valley? Well, it turns out to be a “basket” of good and services.
Your dry cleaning is going to cost you more here than in San Francisco, for one. And then there's that globally recognised determinant of quality of life, the cost of butter. Because of a slowdown in milk production, the cost of butter rose 28 per cent in Europe last year. Brutal.
Seriously: butter, along with the price tag on meat, fish and a pint, accounted for Dublin leapfrogging 48 places into the survey’s top 100 expensive cities, compared to last year.
So why in the world was this reported as some globally significant shift? Clickbait headlines, perhaps. And most people won’t read much beyond that eye-grabbing but utterly meaningless headline.
Do we have a problem with housing supply and housing costs in Dublin? Absolutely. Is Dublin, and Ireland as a whole, more expensive than many other European countries? Absolutely.
Does all of this collectively pose a risk that Irish people will migrate abroad, and multinationals will move employees to lower cost locations? Yes and yes, and the Government cannot be complacent.
But come on. A pricy stick of butter and ephemeral currency inflation do not make Dublin “more expensive than Silicon Valley” in any significant or sustained way.
