AVERAGE PRIVATE RENTS in Ireland have increased by 84% over the last decade while income inequality is at a record low, according to figures by The Economic and Social Research Institute.

The ESRI’s second annual Poverty, Income Inequality and Living Standards in Ireland report, published today, shows that average private rates in the State rose from €589 to €1,084 per month between 2012 and 2021 in real terms. 

Rising rents have in turn led to a huge decline in the affordability of housing for young and low-income private renters. 

The report found that average housing cost to income ratios – which measures the median cost of a house by the median household income – increased from 0.226 to 0.304 between 2007 and 2021 for private renters in the lowest income category.

It also increased from 0.116 to 0.221 for private renters aged 18-34.

The report also found that the gini coefficient – which measures the distribution of income across society – is now around a fifth below its historic high in 1987.

The report estimates that the at risk of poverty rate in 2021 was 15.6% on an after-housing cost (AHC) basis, amounting to 785,000 people.

This is compared to 12.4% on a before-housing cost (BHC) basis, which amounts to 625,000 people.

It estimates that the AHC at risk of poverty rate for lone parents and their children in 2021 was 46%, amounting to an estimated 153,000 people.

However, it also estimates that in 2021, 69% of the 695,000 people experiencing material deprivation – not being able to afford two or more items from a list of 11 essentials – had incomes above the poverty line on an AHC basis.

Of these, almost half lived in a household where someone reported having a disability, with most of these less than €100 per week above the poverty line after accounting for household size.

“Addressing the challenges of housing affordability highlighted in our report will require a sustained increase in supply, particularly of social and cost rental housing,” Barra Roantree, an economist at the ESRI and an author of the report, said. 

“Until that is achieved, and despite the large costs involved, supports like HAP will continue to play a key role.

“Given this, more regular review of the income and rent limits governing the scheme will be needed if the exposure of more households to unaffordable housing costs is to be avoided.”

ESRI ESRI

 At risk of poverty rates remain higher for those in households where someone reports a disability, the report states. It found that 267,000 people were at risk of poverty on a BHC basis last year, compared to 315,000 people on an AHC basis. 

The report states that those living in households where someone of working age is in paid full work make up around 220,000 of the 625,000 people below the BHC income poverty line, and 333,000 of the 740,000 people below the AHC income poverty line.

“This is despite their much lower income poverty rates, and reflects the fact that households with someone in paid work make up the bulk of the working-age population,” it states.

The so-called “working poor” are also disproportionately likely to be lone parents and
renters, it states.

A quarter of the working poor live in a lone-parent household, while over half lived in private or supported rental accommodation, compared to just 5.5% and 28% respectively of working households above the poverty line.

Another author of the report, Paul Redmond, said in work-poverty is an area of concern as it is linked to lower well-being and social exclusion.

In 2019, approximately 220,000 people were affected by in-work poverty in Ireland. This was particularly prevalent among supported renters and lone parents. The working poor were also disproportionately reliant on someone earning the minimum wage.

“However, increasing the minimum wage will have a limited impact on overall poverty reduction, as most people at risk of poverty do not work. This highlights the need for other policies to tackle poverty, such as affordable, quality childcare to allow full-time work by at least one adult in a household.”

Michelle Barrett, another author of the report, said it finds that the way poverty is officially measured “potentially excludes many individuals in households affected by a disability”.

“This is because it does not account for the substantial extra costs of living faced by this group, and suggests that there may be a case for revisiting the way the income-related component of the official poverty indicator is measured.”