Housing Affordability in the Republic of Ireland: Is Planning Part of the Problem or Part of the Solution?

Abstract

The advent of strong economic growth and falling unemployment in Ireland in the mid-1990s, drove population growth and a rising demand for housing, which in turn affected rising house prices and rents. This paper reviews the evidence with regard to the affordability of house purchase in this country over the last decade, together with government assessments of and responses to this evidence. It subsequently examines the impact of Ireland's relatively laissez-faire land-use planning system on housing affordability and concludes that it has not constrained housing output nationally. Indeed, Ireland's house building rate, which is among the highest in the EU, has probably helped to curtail price inflation. However, failure to actively and strategically manage this new supply, coupled with the distorting effects of fiscal policy, means that it has not been delivered in the locations where affordability problems are greatest or to the households in greatest need. Finally, the paper assesses the potential of recent planning reforms intended to manage supply more effectively and to confer planning with a more direct role in addressing affordability problems by using planning gain to deliver housing for sale and rent to low-income households.