Since Covid 19, Ireland’s housing news has been dominated by headlines about skyhigh prices, record rents, and a severe housing shortage. Recently, however, there has finally been some encouraging news.
According to a recent Irish Times analysis by property economist John McCartney, both rent inflation and house price inflation have begun to slow.
New home completions reached more than 36,000 last year – the highest level since 2008.
At first glance, this appears to be a turning point.
We all like a bit of good news, but is everything really as it seem? Does a slower rate of house price increase actually mean that housing is becoming more affordable?
Well, that’s what we will try to find out.
Falling House Prices Does Not Always Mean We Can Easily Afford One.
Well, that didn’t last long now , did it?
One of the most important observations in the article is that house prices and rents continue to rise faster than wages.
In simple terms, even if house price inflation falls from 10% down to 6%, a household whose income grows by only 3% is still falling further behind.
Let us Consider a simple example.
- A household earning €50,000 per year receives a 3% pay increase, bringing its income to €51,500.
- At the same time, a €350,000 home rises in value by 6% instead (instead of a projected 7% for example), increasing its price to €371,000.
While the market has “cooled”, the deposit required has increased, the mortgage required has increased, and monthly repayments have likely increased.
The buyer is, in many respects, further away from homeownership than they were a year earlier.
This raises an important question in my opinion.
Should we judge success by whether house price inflation is slowing, or by whether ordinary people can actually afford to buy a home?
Housing Supply Is Increasing. And I believe That’s Good News.
The same Irish Times article rightly highlights the increase in housing delivery year on year, helped in part by various government policies over the last decade.
However, one more point made in the article had me scratching my head.
‘Last year, local authorities and Approved Housing Bodies acquired more than 9,000 newly built homes for social housing – around one quarter of all new housing delivered.‘
While this may reflect a huge commitment by the State to try to address housing need, it raises an interesting policy question in my humble opinion.
”Should the State Be the Largest Buyer of Irish Homes, Or a Larger Builder/Producer?”
I believe that the reasons why the Irish government is the largest buyer of completed homes is understandable.
- This help families receive housing more quickly.
- Private Developers, which Ireland is heavily reliant on, gain certainty and confidence to start and complete housing projects.
- Also, yearly housing targets, as decided by the government, can become slightly easier to achieve.
Yet I still can’t help but ask whether buying large numbers of homes from the private market is the best long-term approach for everyone involved.
I don’t claim to fully understand the economics of it all fully, I admit that. But surely, every completed home bought by the State is one less home available for purchase by private individuals.
So, I’d like to ask:
”If the state started building homes directly alongside private development, would it not help to increase overall housing supply faster, while also reducing competition for completed homes and further housing inequality over the long term?‘‘
A Role for the €14Bn Apple Tax Windfall?
If you’ve been here before, you’re not surprised at all about me bringing this up.
The Irish Exchequer is now in possession €14 billion from a longstanding Apple tax case, which has been added to the National Development Plan.
The €14bn Apple tax windfall, which was finally collected in full by the Irish Government in July 2025, is a once-off, non-recurring amount of money.
- It was money that was owed to the Irish State since 2016 by Apple Inc.
- This tax was not paid or borne by the common taxpayer; so this fund could be used as an incredible social and PR tool to help Irish politicians score much-needed political points with the Irish Public while helping them at the same time.
- The Apple Tax is not a foreign loan, so there are no state obligations or strings attached to a foreign lender.
The above reasons are precisely why I believe the Apple Tax should be allocated specifically to resolve the Irish housing emergency, rather than being stored away in the well-intentioned but non-urgent National Development Plan (NDP), where the money now sits.
As a once-off windfall, part of this funding could be used to strengthen the State’s ability to build housing directly, rather than relying primarily on buying homes from developers.
Such investment could include:
- Building social and affordable housing directly on public land.
- Refurbishing easily restorable vacant and derelict properties, and adding them directly into state ownership. Income from these homes can then be reinvested into more social housing.
- Expanding local authority staff and improving planning system.
- Investing in water, wastewater and transport infrastructure to unlock housing development.
- Supporting modern methods of construction and regional SME builders. etc
For more on how I believe the Apple Tax could be used, kindly go HERE.
These investments would not replace private developers. Rather, they could complement them by increasing overall housing capacity, while also earning much-needed goodwill for state officials.
What Could Be the Benefits?
Direct State building could:
- Increase the total number of homes available.
- Reduce competition between the State and private buyers.
- Leave behind long-term public assets.
- Improve housing security for future generations.
- Reduce pressure on emergency interventions during future housing shortages.
If it works, these measures could gradually make housing more affordable.
However, There Are Challenges Too
At the same time, I will admit that direct State building also comes with its own risks.
From my research over the years, I have discovered that:
- Public construction projects are notorious for experiencing delays, exceeding budgets and contract challenges.
- Ireland has Labour shortages in the construction sector. I don’t expect the required labour to suddenly appear out of thin air without a specific work visa programme for this labour. Right now, conversations around immigration in Ireland are both very complex and sensitive.
- Ireland has a lot if issues in its overal Planning system which need to be looked at first, i,e, long judicial reviews, lack of staff, etc.
- Without the direct government building of homes, large private developers & foreign investment would continue to play the biggest role in delivering housing and continue to make housing grossly unafforable.
The Big Questions
Perhaps the most important issue raised by the Irish Times analysis is not whether house price inflation has slowed, but whether actual housing affordability is actually improving.
If homes continue to become more expensive than wages, slowing inflation alone will not be enough to help aspiring homeowners. That is why increasing housing supply remains the only way to address this challenge.
So the question, in my opinion, is how that additional supply should be delivered.
- Should Ireland continue relying primarily on private developers, who have the government as their largest customer?
- Or Should the State become a builder itself, and also start building homes directly to increase housing delivery?
ALso:
- Could direct State building complement private developers rather than compete with them?
- Would investing part of the €14 billion Apple tax windfall in long-term housing assets benefit future generations?
- How should Ireland balance public investment with private sector delivery?
- Which approach is most likely to make homes more affordable over the next decade rather than the next year?
There are no simple answers.
However, I belive that encouraging open discussion about these questions may be just as important as the policies that may ultimately be chosen.
