Property insights with Johnny Gannon, Fair Deal Property
Ireland is spending record sums on housing. Investment in infrastructure, planning and social homes is essential. But one fundamental question remains: can an ordinary working person still afford to buy a home?
The deeper cost of our housing crisis falls on the squeezed middle: the nurse and the teacher earning too much for social housing but too little to purchase a €500,000 home. Last Wednesday, some 400,000 workers stood on picket lines in the largest strike this country has seen in seventeen years, hundreds outside University Hospital Galway.
On the surface, the dispute is about pay and the cost of living. But listen a little more closely to those picket lines, and increasingly it's about housing. A health worker in her thirties still living with her mother. A teacher who cannot get onto the property ladder. People doing essential jobs, paying their taxes and contributing to society, yet unable to afford a home of their own. A generation ago, many of these people would be homeowners. They would have put down roots and built a future in the communities they served.
Homeownership gave them more than a roof over their heads. It gave them a stake in their town, their community and their country. Homeownership has been the bedrock of Irish social stability for generations. It has given working people security, independence and a tangible stake in the society they help sustain. We should be very careful about allowing that opportunity to disappear.
The State is increasingly being asked to fund, subsidise, guarantee or directly provide homes because the private market can no longer deliver enough housing at prices ordinary working households can afford.
Social and cost-rental housing are essential. But there is a fundamental contradiction when publicly supported homes can be delivered while the private three-bedroom semi-detached house next door cannot be built and sold affordably. Ask any Galway builder whether a scheme stacks up. Construction costs, planning delays, development levies and finance continue to obstruct delivery.
Recent EY research illustrates the problem. More than 80% of surveyed property professionals expect residential property to attract the strongest investment appetite of any sector next year, yet 44% identify construction costs and viability as the greatest obstacle to development. Look closer at where investors say they want to be. Social and cost-rental housing accounted for 52% of responses. Privately rented homes accounted for 30%. That is telling. The most attractive asset in Irish housing is one where the State underwrites the income. Capital is not fleeing the sector. It is retreating to the corner where viability is guaranteed.
We are socialising the responsibility for housing delivery without fixing the economics of housing delivery itself. A healthy society needs strong public housing provision alongside a functioning private market. One should complement the other, not replace it.
Otherwise, we risk creating a country divided between existing homeowners, those dependent on State-supported housing and a generation of working people trapped in the middle. That is not simply a housing problem. It is a question about the type of society we want to become.
So what should change? First, insure credit rather than gifting cash. State-backed mortgage insurance could help creditworthy buyers access 95% mortgages with proper safeguards. Guarantees on development loans could also bring smaller builders back into the market.
Second, count rent as repayment evidence. A couple reliably paying €2,000 monthly rent has demonstrated repayment discipline. Banks should consider that alongside income, deposits and affordability stress tests. Third, reward downsizing. Modest incentives, alongside suitable smaller homes locally, could release family houses while allowing older owners to remain in their communities. Fourth, cut costs the State controls. Targeted, time-limited reductions in levies and contributions, tied to completed affordable homes, could improve viability without rewarding land speculation.
The objective must remain simple: make homes viable to build and affordable for working households to purchase. The State must provide a strong safety net, not become the entire housing system. We cannot indefinitely socialise housing delivery while leaving the underlying market fundamentally unworkable.
The ultimate measure of housing policy is not simply how much public money we spend. It is whether the people who keep this country running can afford to build a life here. Working people deserve more than housing insecurity. They deserve a home, a future and a stake in their country.
Johnny Gannon is founder of Fair Deal Property, Auctioneers & Estate Agents, Galway. For property advice, call 091 394593 or visit www.fairdealproperty.ie
