Leo Varadkar, whose government masterminded the remarkable recovery of the property market in the Republic of Ireland, could now be punished for creating too much of a recovery.
The property boom has meant that a generation is now struggling to afford rents that are some of the highest in the world, higher on average in Dublin than Sydney, Singapore and Tokyo, and the price of the average home has surged by nearly 90 per cent over the last seven years.
Ireland experienced one of the worst property market crashes in Europe at the start of the Great Recession in 2008, with house prices falling by as much as 50 per cent. But in the years since the economic turmoil of the Great Recession helped Irish Prime Minister Leo Varadkar to power. Now, the feeling is that the recovery has been too rapid, pushing property prices sky high, and threatening oust him.
It’s a familiar story in the West, that property prices and rent rises have left, in particular, low income families struggling to find accommodation they can easily afford.
The problem has been particularly acute in the Irish capital of Dublin with daily stories in the press of low-income families languishing in temporary accommodation. They occupy guest houses and hotels waiting for social housing, and many workers in their 30s are still living at home with their parents.
After the crash in 2008 the Irish economy was shot to pieces, one of the worst basket cases in the EU. But the transformation under Leo Varadkar’s centre-right Fine Gael party has been phenominal, making it one of the fastest growing economies in Europe over the last five years.
However, as is often the case in politics, success does not always cut any ice with the electorate. Fine Gael could be vilified for the property crisis created as a consequence of its economic achievement – every Irish opinion poll thus far puts rival party Fianna Fáil, the party in charge when the economy went bust ten years ago, in the lead.
Mary McCormack – a 61-year-old homeowner, with her 34-year-old son living at home and considering emigration – is planning to vote Sinn Fein. She has said:
“I have never felt before such a movement of anger towards the government. He’s got a good wage, he saves his money but he can’t afford to step onto that ladder. A man that age should have his own place.”
Sinn Fein housing spokesman Eoin O Broin has said that, “”There’s no doubt the lack of available rental accommodation has become a real burning election issue.”
It is estimated there are nearly 10,000 people in the Irish Republic living in emergency accommodation and are effectively considered homeless, that’s according to new government data.
But while all the political parties are in agreement that rents need to stop rising and house-building needs to increase to keep prices down, they cannot agree as to how much the state needs to intervene in the private housing market.
Laws have been introduced by the Fine Gael government to control rents in the major cities by establishing “rent pressure zones”. Here, rent increases are capped at 4% a year. Meanwhile the left-wing Sinn Fein party is calling for a total rent freeze and a ban on evictions.
The Irish housing crisis is a reflection of what’s going on across the Western world. High asset prices have been boosted by low rates of interest and government spending (Quantitative Easing) as we came out of recession.
But when prices get out of control as in the Irish case, it’s a lesson for all governments that their popularity for success can easily evaporate when it negatively affects large sections of the population.