Much of the vaunted successes of the Celtic Tiger era in Ireland was based on construction, with massive numbers of house, apartment, hotel and commercial building projects creating employment not just for Irish workers but for large numbers of immigrant workers also. Property boomed, lots of people became very rich. Then suddenly it crashed and lots of people became very poor – though not necessarily the ones who’d benefited most from the boom.
House Prices in Ireland
If there was any one thing that sums up the madness that was the boom in Ireland, it was house prices. People started to believe they only went up and that you could become rich just by owning one. If the resultant rise in prices was dramatic, the fall was even more so. Many families struggled – and are still struggling – to pay loans on homes that were not worth near what they paid for them, or fell into arrears as jobs were lost and incomes fell.
And that’s without even mentioning the buy to let market, which went mad entirely.
An average house is a nebulous thing of course, it could be any thing from a box sized apartment to a palatial house on its own grounds, and there is huge variation from neighbourhood to neighbourhood, but these figures give a broad outline of how (badly) it went after 2007.
Look carefully at the graph above though, and you’ll see a bit of a change in 2013. House prices in Dublin rose – just a little – and those elsewhere fell more slowly. It look like the start of a change, and it was.
Is there another boom on the way? Maybe. This time the problem is a different one. Because of the slow down in construction, combined with a rise in population, there is an acute housing shortage driving the market. This is seen not only in the rise of house prices. There is an increasing problem with homelessness and a situation where young people in particular are priced out of the housing market and resigning themselves to a lifetime of renting.
The graph below shows previous years before and after the boom as reference points to show price recovery. But it does not tell the whole story. In some more ‘desirable’ parts of Dublin prices have returned almost to peak boom levels.
Planning Permissions Granted:
I’ve included some 1990s figures in the chart below as a pre-boom baseline – the boom probably began in 1997, so the earlier figure probably represents something like a ‘normal’ construction rate, gradually increasing in line with population growth.
2007 was the peak of the construction boom, but it is important to note that a sizable majority of permissions granted then have never proceeded to building stage. Some never will, having managed to get planning even though located where nobody wants to live or in areas unsuitable for housing.
In fact at this point we are looking at demolishing ill-thought out or badly built residential developments built during the boom but never sold or occupied – Ireland’s ghost estates, as pictured at the top of this page.
It’s easy to see the problem now. While planning permissions for non-housing development has recovered, any recovery is not reflected at all in planning permissions granted for dwellings. There is nothing to suggest we will soon be able to provide enough housing for an already hungry and growing market, leading to a genuine shortage and resultant price rises.