Housing policy is failing. The industry remains focused on providing additional commercial property, even as living space for company workers falls short. Private rents are way out of line with gross family incomes and the wrong kind of accommodation is being built to meet pent-up demand. Having announced a 20-year national development plan involving five cities, the Government is now playing catch-up with developers and vulture funds by establishing a Land Development Agency to acquire building land at affordable cost.
Unsustainable rents are a recipe for disaster. Rent pressures will feed into wage demands. Industrial unrest will follow and a loss of competitiveness will affect inward investment and future job creation. We have been here before. Before the crash in 2008, the average household income was €4,000 higher than it is today, at €60,581. But average rents were 30 per cent lower.
In Dublin, they are now one-third higher than at the peak of the Celtic Tiger boom, according to a Daft rent report. These are asking prices for new lets, not existing rents covered by the Residential Tenancies Board. But they reflect the ambition of thousands of frustrated and angry tenants and a pent-up demand. Trinity College Dublin economist Ronan Lyons, who compiled the document, spoke of “huge concern” in the private rental market because very strong demand was not being met by supply. An increase in residential construction was, he said, being focused on estate developments and not on apartment schemes where the most acute shortages existed.
Rent increases in Limerick and Waterford have exceeded those for other cities, following their designation as growth centres, but overall rents lag behind those in Dublin, Cork and Galway. Asking prices in the cities rose between 11 and 20 per cent. Real estate investment trusts are major providers in the apartment sector and are acquiring land for future development. To ensure competition and affordable rents, the Land Development Agency must deliver suitable sites for high-rise developments.