Mass Migration and the Origins of the Irish Housing Crisis

Despite the economic recovery that Fine Gael and Fianna Fáil keep reminding the public about, homeownership remains an ambition confined to those willing to sacrifice their blood, sweat, and tears to achieve. 

Even during the economically murky era of the 1980s, when interest rates and unemployment were much higher than today, a couple who sought a 10% deposit on a home could achieve this by saving 25% of their disposable income. Today, couples would have to save half their income to afford the same deposit. In the Pale that figure increases to three-fourths of their income.

More stark figures: from the 1980s to 2020 house prices rose by more than 230% whilst wages only rose by 100% contextualising the salient dilemma: Ireland remains above the EU average in terms of young adults still living at home with their parents at over two-thirds of 25-34-year-olds.

For young people today, homeownership looks as far off as man landing on Mars.

There are myriad reasons why Ireland’s housing predicament eclipses that of other developed nations. Ireland relied quite heavily on housing as a means of revenue during the Celtic Tiger. 

Ordinary people lay prey to the fangs of greedy developers promising the sun, moon, and the stars knowing full well they would be scarred. The commodification of housing persists to this day and must be addressed. However, one other factor at play explains the dire straits prospective homeowners find themselves in – a factor the chattering classes are uninterested in addressing.

Following the economic collapse, the Oireachtas set up several committees to establish how the facade that was the Celtic Tiger duped the masses into mounds and mounds of unsustainable debt.

In July 2015 ‘The Joint Committee of Inquiry into the Banking Crisis’ invited the architect of Ireland’s corporate tax regime, former finance minister Charlie McCreevy. 

Sinn Féin’s Pearse Doherty pressured the embattled ex-minister to spell out his understanding of the property bubble. Evasive and displaying mastery in circumlocutions, 

McCreevy outlined the factors at play within the property market during his time at the helm of finance. Amid his ramble, McCreevy addressed the elephant in the Celtic Tiger’s enclosure; he cited the State’s massive population increase to contextualise the housing bubble that permeated in the run-up to the collapse: “But you must remember, in Ireland, the population… increased dramatically… so there was an increased demand for housing,” McCreevy opined before being interrupted by Doherty who spoke for the current Irish ruling class when he said, “I’m not looking for an answer in terms of the demographics”.

McCreevy’s assertion stands up to scrutiny: from 1996-2016 Ireland’s population grew at 1.3% per year, triple the EU average. To accommodate such a massive increase in immigration the Irish government embarked on a housing bonanza that exceeded many other jurisdictions precisely due to such a massive population increase.

But don’t say we weren’t warned.

In March 2000, the ESRI advised then Taoiseach Bertie Ahern to ‘slow down the economy rather than embark on a campaign to attract low-skilled immigrants’. The ESRI added that budgetary changes to slow down the economy would be preferable to the planned campaign to attract immigrants from abroad.

Bertie, the archetypal Dub both in a fashion sense – regularly donning the anorak – and vernacularly, rarely, if ever, heeded the advice of others – be they the media or other outside forces beyond the cabinet, except, of course, developers who often gave their ‘advice’ with envelopes. This was to his benefit electorally but to the long-term detriment of Irish workers.

Incentivisation of low-skilled immigration tends to lower wages across the low-skilled sector. From 2005-2019 64% of net new jobs went to non-nationals according to the Central Statistics Office (CSO), which partly explains why 23% of workers are currently in low-paying jobs. As it stands, the non-national population represents close to 20% of the overall population in the Republic.

McCreevy is right: Ireland’s massive, governmental incentivised, unsustainable population increase partly explains the current housing dilemma.

In a move eerily similar to the ESRI’s warning, The Department of Housing warned the government that proposals to replace the direct provision with a fast-track method to house asylum seekers are “not workable or implementable” and would have a “significant negative effect” on the ability of homeless people to acquire homes.

The government ignored the ESRI in 2000, will the current government ignore the Housing Department this time around?