Housing : A Growing Trend towards Inequality


The recommendations of the All-Party Oireachtas Committee on the Constitution on the right to private property and its relationship with the requirements of the greater social good, take on particular significance when seen in the context of Ireland’s recent unprecedented demand for housing and infrastructural development, arising from nearly a decade of high levels of economic growth.

A key factor underlying the jump in the demand for housing has, of course, been the rise in population: the 2002 Census showed an increase of 8% since the previous count in 1996. Ireland’s growing population includes an increased number of people in the key household formation groups. The total the number of households rose by 14.7% between 1996 and 2002. There has been a fall in average household size, which is now dropping towards the European average of 2.63: whereas the average household contained 3.34 persons in 1991, this fell to 2.91 in 2003. (1) The rapid growth in employment and incomes have also been critical influences on housing demand.

The scale of new house building over the past nine years is certainly striking: in total nearly 400,000 new homes have been completed. Recently published statistics show that 2003 was the ninth successive year of record house building: 68,819 dwellings were completed, an increase of 19% on the output in 2002, which in turn was an increase of 19% on the previous year’s figure. (2) The level of completions in 2003 was nearly 160% higher than that in 1995 (26,500).

Ireland has now by far the highest rate of house building in Europe. In a comment on the housing output for 2002, the ESRI pointed out that this was an ” exceptionally high level of completions for an economy the size of Ireland” and was “equivalent to 22.7 per cent
of completions in Germany, a country with a population of over 82 million.” (3)

House Prices

House prices in Ireland have risen by over 60% since 1998. The figures for 2003 show yet further upward movement in prices of both new and second-hand houses. Nationally, new houses rose in price by 13.4% on the previous year and second-hand houses by 16.3%. In the Dublin area, prices rose by 13.1% for new houses and by almost 20% for second-hand. (4) The average price of a new house nationally in 2003 was €224, 567 (in Dublin, €291,646) and of second-hand houses, €264, 898 (in Dublin, €355,451). (5)

The 2003 price increases indicate that the moderation in prices which had taken place by 2001 has ceased; the latest increases, occurring as they do in the year which saw the highest ever level of new completions, challenge the reliance on increased supply as the means of moderating prices. (6)

With house prices over the past decade increasing six times faster than the consumer price index, and salary levels rising at an average of 3% while houses rose by well into double figures, (7) it is understandable that there is considerable public concern about the affordability of housing. A recent study for the Combat Poverty Agency points out that although house prices have risen much more rapidly than incomes, falling interest rates and rising after-tax incomes have meant that mortgage repayments, as a percentage of disposable incomes, have not risen as dramatically as the house price increases would at first sight indicate. (8)

However, the study acknowledges the potential danger to ‘affordability’ should there be a rise in interest rates. What is also of concern is that ‘affordability’ is usually based on the assumption of two-earner households; this has huge implications for the choice or lack of choice couples may have about having children, the timing and number of children they have, and whether there will be an option for one or other parent to stay at home full- time, should they wish to do so. The report on the Public Consultation Fora on family life, carried out to mark the tenth anniversary of the International Year of the Family, noted that participants had cited the costs of housing “as being particularly instrumental in driving the trend towards two-earner households”. (9)

The other dimension of affordability is, of course, being able to become a house purchaser in the first place. The Combat Poverty study acknowledged the problem of accumulating what is now an ever-increasing sum to make up the deposit for a house, particularly for those paying high rents in private rented accommodation. Just as high long-term unemployment brought the phenomenon of the ‘discouraged worker’, who would give up on the possibility of getting a job, so persistently high house prices may have brought the ‘dicouraged buyer’ who is stuck in the private rented sector and can see no immediate, or even long-term prospect, of escape.

The difficulty in becoming a first time buyer was highlighted in many of the submissions to the All-Party Oireachtas Committee on the Constitution. An analysis in 2002 for four housing organisations, Focus Ireland, Simon Communities of Ireland, Society of St Vincent de Paul, and Threshold, estimated that one third of new households nationally would be unable to purchase a home in the immediate future; the figure for urban areas was higher still, at 42 %, and for Dublin it was 50%. (10) The Public Consultation Fora on family life provide interesting glimpses of the issues as they are being experienced currently: “recent pressure in the housing market in Ireland acts to increase the number of households that contain more than one family.” (11) And again, “The costs of housing and education among other things mean that parents still have to if not provide for them at least help their children financially well into their adulthood. The Fora heard instances of parents having to remortgage their house or even in extreme cases to work beyond their planned time of retirement so that they could assist their children.” (12)

The difficulties surrounding affordability of house prices now seem to be translating into a decline in the overall percentage of households which are owner-occupied: having peaked at over 80%, this had fallen to 77.4% by 2002 and the recent Quarterly National Household Survey indicates that it has declined still further, to 75.2% nationally, and 68.3% in Dublin. (13)

Private Rented Sector

The private rented sector has experienced significant growth in recent years, not just in absolute numbers but as a percentage of overall housing, reversing a long decline. Whereas there were 81,400 privately rented houses in 1991, by 2002 there were 141,500, an increase of 75%. (14) The sector represented 8% of households in 2002 but 11.1 % in 2002.

Alongside the growth in the sector has been a significant increase in rental costs. Ireland had the highest level of rent increases in the European Union in the period 1997 to 2001. (15)

The Combat Poverty Agency report points out that in fact increases in rents were well underway from 1987 onwards, that is, in advance of the boom in house prices. In 1987, rents averaged €45 per week, but by 1999-2000 they had risen 2.8 times in constant money terms and stood at an average of €126 per week. Furthermore, among private renters, the share of household income absorbed by rent came close to doubling, rising from 12.5% to 21%. (16) Recent figures show that the average weekly rent level is now €177.55 nationally; in Dublin it is €224.42. (17)

A particularly noteworthy finding in the report for Combat Poverty was the widening gap over the past fifteen years in the costs of housing experienced by private renters as compared to mortgage holders. “In 1987 private rents and mortgage payments were at similar levels, both in absolute amounts and as a share of household expenditure. Yet by 1999-2000 the average private rent was 1.7 times the average mortgage payment in absolute amounts and was 2.2 times the average mortgage payment as a share of total household expenditure.” (18)

The report points out that, in fact, it is in the private rented sector that the most serious affordability problems in the Irish housing system are now occurring. About one fifth of private renters were paying in excess of 35% of their household expenditure on rent (35% being chosen as the point beyond which ‘affordability’ problems would be likely to occur). “Even among house purchasers in the earliest stages of the family cycle, where mortgage burdens were heaviest, less than 5 per cent had mortgage payments that exceeded the 35 per cent threshold ..” (19)

A highly significant finding of the study was that a greater percentage of private renters than of any other tenure group were pushed into poverty (using a poverty line drawn at 60% of median income) as a result of the share of their income going on housing. (20)
This reflects the presence in the sector of a significant number of renters who are on low incomes. Rent allowances under the Supplementary Welfare Allowance scheme were being received by 59,000 households in the private rented sector at the end of 2003, up from 54,200 in 2002. Nearly 40% of renters in 2002 are receiving rent allowance. In the face of increasing rents, and the consequent rise in cost to the Exchequer of rent allowances, it had been a feature of policy to restrict access to and tighten the amounts available under these allowances. In effect, groups who are among the poorest people in the country are being made to bear the cost of rising rents.

Under the requirements of the Housing (Miscellaneous Provisions) Act, 1992, all landlords are required to register their rented properties with the local authority and to provide certain minimum standards which can be inspected at any time. However, only 22,646 households (16% of the total) are registered. (21)

The Housing Statistics Bulletin for 2003 shows that apart from the Dublin authorities only four local authorities had carried out inspections in relation to registration and only about half had undertaken inspections regarding standards. Of the dwellings inspected, around 40% in both the Dublin Corporation area and the Cork Corporation area were deemed as failing to meet regulatory requirements. (22)
The provisions of the Residential Tenancies Bill, introduced in 2003 but not yet enacted, represent some improvements in terms of security of tenure, long recognised as one of the major problem areas in Irish private rented housing. In the context of the marked increases in rents in recent years, it is disappointing that the Bill is so weak in this area: it provides only that rents can not be set, either at the beginning of a tenancy or at a subsequent revision, at higher than the market rent. It has been suggested that the Bill represents no more than a “limited, tentative, first step” in the process of providing greater protection for tenants. (23)

The rising number of units in the private rented sector may be welcome in so far as it represents an additional availability of accommodation at a time of pressing need, and in so far as it offers greater variety in housing tenures and a flexibility that is important for a growing and mobile labour force. But given the cost of accommodation in this sector, the lack of security and the failure to regulate and ensure standards, the growth in the sector is hardly an unalloyed benefit.

Social Housing

The output of social and voluntary housing rose by nearly 53% between 1995 and 2003. At first sight this may appear impressive but it obscures the fact that the increase is from a very low base: from 2,960 houses in 1995 to 6,133 in 2003 (4,516 of which were built by local authorities and 1,617 by voluntary housing housing associations). The output by the voluntary sector, while still small in overall terms, has grown significantly, – from 579 in 1999 to 1,617 in 2003, an increase of nearly 180%.

Despite the increases of recent years, local authority and voluntary housing completions have remained below 10% of total output; they represented just 8.8% in 2003. This is in marked contrast to the situation prior to the 1987 public expenditure cutbacks, when local authority output tended to represent between 20% and 30% of total new dwellings; in 1975, for example, it amounted to 33 %.

Reflecting the long period of limited building by local authorities, and the continued policy of selling off housing in this sector, there has been a fall in the percentage of total households living in local authority housing – from 15% in 1971, to 13% in 1981 and to 7% in 2002 (88, 206 households) (24)

Figures for output in local authority and social housing must be seen in the context of housing need; 48, 413 households (consisting of 130,000 people, and it is estimated around 50,000 children) were shown to be on waiting lists in the assessment of local authority housing needs carried out in March 2002; this represented an increase of 23.5% on the 1999 figures. An analysis in 2002 of current waiting lists and projected further need highlighted how far short of adequate is the present rate of providing additional social housing: it was calculated that with current levels of provision the annual decline in waiting lists would be so little that it would take up to thirty years to eliminate the lists. (25)

‘Affordable’ Housing

There are now several schemes in operation to provide ‘affordable’ housing, that is housing for purchase that is subsidised by public authorities. The most recent of these is the scheme, under the partnership agreement, Sustaining Progress, to provide 10,000 homes on sites already in public ownership. Steps towards implementing this have been taken but no houses have as yet been completed. In 2003, a total of 2,610 houses were provided under the earlier affordable housing and shared ownership schemes. (26)

While the provision of affordable housing is clearly important, there is considerable concern that the government sees its action in this sector as more or less discharging its responsibility to intervene in the provision of housing, with the effect of obscuring the need to provide for those who require social housing. An analysis of the incomes of those on local authority waiting lists in 2002 shows clearly that the majority would not be in a position to purchase a home, even in the affordable housing sector and so would need rented accommodation: 85 % had annual incomes of less than €15,000 and 67 % of less than €10,000. (27) Clearly there is need for greater and sustained action in relation to both social housing and affordable housing.


The official figure of 5,581 homeless persons is widely challenged by groups working with the homeless who argue that the true scale of the problem is considerably greater. Recent years have seen important policy initiatives in the area of homelessness, with the development of integrated strategies at local level in an attempt to provide a co-ordinated response to the different but related needs of homeless people, including accommodation, health, welfare and other supports. Spending on services to address homelessness has also increased. But it is telling that in a presentation to a conference in March 2004, the Simon Communities of Ireland found it necessary to point out that “this focus on the complexity of homelessness has sometimes been at the risk of neglecting the fact that the primary need of someone who is homeless is housing”. It stated unequivocally that in taking the integrated strategy forward: “the first issue is to put housing back at the centre of homelessness policy.” (28)

Right to Housing

Ireland has ratified a number of international covenants which include a right to housing, notably the International Covenant on Economic, Social and Cultural Rights. Under Article 11 (1) of this, States parties are required to “recognise the right of everyone to an adequate standard of living.. including adequate, food, clothing and housing…”
It is important to bear in mind that in fulfilling the obligation to recognise the right to housing, States parties are expected to do so in light of the overarching requirements of Article 2.1 of the Covenant. This obliges each States party to implement the rights of the Covenant “to the maximum of its available resources” with a view to “achieving progressively” their full realisation. Ireland is now more wealthy than ever before; in accordance with Article 2.1, its obligation to respect and implement the right to housing under the Covenant is therefore all the greater.

In a General Comment on the interpretation of Article 11 (1), the UN Committee on Economic, Social and Cultural Rights, notes that: “The right to adequate housing.. is of central importance for the enjoyment of all economic, social and cultural rights.” (29) It emphasises that the right to adequate housing “applies to everyone” and that it “should not be interpreted in a narrow or restrictive sense” – equated, for example, with minimal provision of shelter. Interestingly, the Committee also says that the interpretation of the right should not be one that “views shelter exclusively as a commodity.” Rather, it says, it should be seen as ” the right to live somewhere in security, peace and dignity” (30)

In its Concluding Observations on Ireland’s Second Report under the International Covenant in May 2002 the UN Committee urged Ireland to ” accelerate its social housing programmes in order to reduce the waiting times for social housing” and to enhance its efforts to provide accommodation for the Travelling Community. (31)
In ratifying the revised Social Charter of the Council of Europe, Ireland opted not to ratify Article 31, on the right to housing. This article commits States parties “to promote access to housing of an adequate standard; to prevent and reduce homelessness with a view to its gradual elimination, to make the price of housing accessible to those without adequate resources”. The Government stated that Ireland was not in a position to accept the provisions of this article – despite the fact that it had already ratified the Covenant on Economic, Social and Cultural Rights without any such reservation. The Government did not provide any explanation as to why it was not in a position to ratify Article 31; it did, however, indicate that it would consider doing so at a later date. This year Ireland submits a progress report on implementing the Charter: this would surely be an opportune occasion for the Government to sign up to this article.

Growing Inequality

There have been many beneficiaries of the housing boom of recent years – land-owners, developers, the construction industry, and clearly also a larger majority of households since most are home owners. Of the last group, those who have benefited most are people who own their homes outright (60 %) and those who purchased before the take-off in prices. When account is taken of the fact that there is no taxation on domestic property and that there has been a reduction of capital gains taxation, the benefits to people in these groups are considerable. Those who have paid the price of the boom are recent buyers who may have struggled to enter home ownership and are vulnerable to any increase in interest rates, people in the private rented sector, those on waiting lists for social housing and the homeless.

The growing division in Irish housing is reflected particularly in the increased incidence of second-home ownership. A quarter of all houses built in 2003 were second (holiday) homes. The Mid-Term Evaluation of the National Development Plan highlighted the extent to which this housing is publicly subsidised both through tax reliefs and the provision of infrastructure.. (32) The study also highlighted the role which holiday homes play in pushing up house prices in rural areas, making house purchase more difficult for local residents.

The Framework Document for the review of National Anti-Poverty Strategy in 2001 stated that an anti-poverty strategy must support a “process of sustainable development” and such a process would imply, among other things, that “the housing system would not deepen or reinforce social inequalities or division”. (33)

This, however, is what appears to be happening in Ireland at present. The division in housing is, of course, related to income, but this alone does not capture the full dimension of the issue, since home ownership is high across all income groups. The deepening inequality is also intergenerational: ‘older’ Ireland which benefited enormously from an array of grants, tax reliefs and subsidies in order to get onto and climb the property ladder seems at times all too inclined to pull the ladder away from many of the younger generation.

Perhaps the most important development of all in recent years is the emergence of what has been called the commodification of Irish housing: the extent to which housing is increasingly regarded for its capital value, seen as a potential pension, a location for investment, rather than what it should be – the provision of shelter, a place that is home, a right to which every person, no matter what age, employment status, or income has an entitlement.



1. See Central Statistics Office, Census 2002: Volume 13 – Housing, Dublin: Stationery Office, Table 9, p. 24; Central Statistics Office, Quarterly National Household Survey: Housing and Households, Third Quarter, 2003, Dublin: Central Statistics Office, 2004, p. 1.

2. Department of the Environment, Heritage and Local Government, Annual Housing Statistics Bulletin 2003, Dublin: Stationery Office, 2004, p. 10.

3. Adele Bergin et al, Medium Term Review 2003-2010, Dublin: The Economic and Social Research Institute, 2003, p. 59.

4. Department of the Environment, Heritage and Local Government, Annual Housing Statistics Bulletin 2003, p. 7.

5. Ibid p. 36.

6. The Irish Home Builders Association in its submission to the All-Party Committee on the Constitution stated: “It is clear that a moderation in house prices has occurred consistent with the significant increase in supply since 1998. We believe that this moderation will be sustained if supply is maintained at levels consistent with demand.” (The All-Party Oireachtas Committee on the Constitution, Ninth Progress Report: Private Property, Dublin: Stationery Office, 2004, Appendix 3, A171.)

7. P.J. Drudy and Michael Punch, “Problems and Inequalities in the Irish Housing System: the Case for Policy Change” : Executive Summary of paper to tasc, 22 February January 2004 (available onwww.tascnet.ie)

8. Tony Fahey, Brian Nolan and Bertrand Maitre, Housing, Poverty and Wealth in Ireland, Dublin: Combat Poverty Agency and the Institute of Public Administration, 2004, pp. 16-7.

9. Mary Daly, Families and Family Life in Ireland: Challenges for the Future, Report of Public Consultation Fora, Dublin: Department of Social and Family Affairs, p. 37.

10. Focus Ireland, Simon Communities of Ireland, Society of St Vincent de Paul, and Threshold, An Analysis of Housing Strategies and Homeless Action Plans, Dublin, 2002.

11. Mary Daly, Families and Family Life in Ireland, p. 26.

12. Ibid pp. 31-2.

13. Central Statistics Office, Census 2002: Volume 13 – Housing, Table 18, p. 41; Quarterly National Household Survey: Housing and Households, Third Quarter, 2003, p. 1. %.

14. Census 2002: Volume 13 – Housing, Table 19, p. 42. Tony Fahey, Brian Nolan and Bertrand Maitre, Housing, Poverty and Wealth in Ireland, p. 35.

15. P.J. Drudy and Michael Punch, “Problems and Inequalities in the Irish Housing System: the Case for Policy Change” : Executive Summary of paper to tasc, 22 February January 2004 (available onwww.tascnet.ie)

16. Tony Fahey, Brian Nolan and Bertrand Maitre, Housing, Poverty and Wealth in Ireland, p. 46.

17. Central Statistics Office, Quarterly National Household Survey: Third Quarter 2002 – Housing and Households, Table 9a, p. 12.

18. Tony Fahey, Brian Nolan and Bertrand Maitre, Housing, Poverty and Wealth in Ireland, p. 47.

19. Ibid p.47.

20. Ibid p.57.

21. CORI Justice Commission, Policy Briefing: Housing and Accommodation, Dublin, March 2004, p. 6.

22. Annual Housing Statistics Bulletin, 2003, p. 65.

23. Seamus Murphy SJ “The Residential Tenancies Bill, 2003: A Tentative First Step”, Working Notes, Issue 46, September 2003, p. 9.

24. Census 2002: Volume 13 – Housing, Table 19, p. 42.

25. Focus Ireland, Simon Communities of Ireland, Society of St Vincent de Paul, and Threshold, An Analysis of Housing Strategies and Homeless Action Plans, Dublin, 2002.

26. Annual Housing Statistics Bulletin, 2003, p. 54.

27. Department of the Environment, Heritage and Local Government, Housing Statistics Bulletin: September Quarter 2002.

28. Simon Communities of Ireland, “Taking the Integrated Strategy Forward”, paper to conference, 21 February 2004, p. 4.

29. United Nations, Office of the High Commissioner for Human Rights, Committee on Economic, Social and Cultural Rights, General Comment 4: The Right to Adequate Housing, 1991, n. 1.

30. n. 6; n. 7.

31. United Nations, Economic and Social Council, Concluding Observations of the Committee on Economic, Social and Cultural Rights: Ireland, 05/06/2002 ( E/C.12/1/Add. 77), n. 32.

32. John Fitz Gerald et al, The Mid-Term Evaluation of the National Development Plan and Community Support Framework for Ireland, 2000 to 2006, Dublin: Economic and Social Research Institute, 2003, pp. 252-3.

33. Goodbody Economic Consultants, Review of the National Anti-Poverty Strategy: Framework Document, Dublin, 2001, p. 43.