LAST WEDNESDAY, HOLLY Cairns made a strong opening address as the new leader of the Social Democrats.
Perhaps the most thought-provoking claim during her first Leaders’ Questions was that she comes from the first generation that will be worse off than its parents.
This immediately drew both strong support and criticism on Twitter, much of it with the unshakable confidence that can only be achieved within a 280-character limit.
The reality, as so often, is much more complicated.
On paper, Irish millennials should be dramatically wealthier than their parents were at the same age.
In 1970, Ireland had just over half the income per head of neighbouring countries.
In 1990, the ratio had risen to about two-thirds. The boom from 1994-2000 was so extraordinary that by the turn of the millennium Ireland had caught up. This was totally unlike the unsustainable property boom that followed.
The gains of the 1990s were real and transformative. There has been nothing like it in Western Europe in the past half century.
The benefits are visible across a whole range of metrics. Life expectancy is seven years higher than it was in 1990. The infant mortality rate has fallen by over 60% in the same period, and by 90% since 1960.
These improvements are as meaningful as it gets.
Irish people enjoy access to a range of consumer goods that would have been unimaginable a generation ago. Of course, almost all of this technology has been developed elsewhere, but as a richer society we are much better positioned to benefit from it. This is as true of medicines as it is of smartphones.
But the obvious and immediate way that the assertion is correct is when looking at housing so it is hard to disagree with Cairns in this area.
According to the Central Statistics Office, Irish house prices surpassed their 2007 peak last year, something which once seemed unthinkable.
There are endless explanations offered for the inexorable rise, which is far from unique to Ireland. Shameless objections to new buildings have certainly played a role, as have 14 years of massive undersupply.
The most difficult factor to explain, however, is construction costs.
A 2020 study by the Society of Chartered Surveyors found the total cost of building a new three-bedroom house in the greater Dublin area to be €371,311, an increase of €40,000 over the 2016 figure.
Only €60,823 of this was attributable to land, meaning that the cost of building would be well over €300,000 even if land was free.
This is totally unaffordable for many families. The core of the problem is not just planning objections or even lack of supply.
Technological advances have made almost all products cheaper relative to wages. Over the long-run, the extent of this is vast. A famous example is artificial light, which went from being the preserve of the wealthy to fantastically cheap.
For whatever reason, housing seems immune, and has for decades.
This is sometimes attributed to higher building standards, but the prices commanded for unmodernised old houses should dispel any notion that this is a primary concern of home-buyers (those who can afford to, pay modern, high prices for these old standards as the market demands).
I am going to do something almost unprecedented in the history of opinion pieces here and admit that I don’t have the answer.
Nor, apparently, do any of the political parties.
But at the very least we should expect more honest effort to ask the right questions. Far more housing supply is needed, but as long as building costs remain high, prices will still stabilise beyond reach for many.
Cairns went on to talk of ‘a fairer Ireland- where it’s easier for people to get by. Where
keeping a roof over your head, or putting meals on the table, isn’t such a struggle for so
many people’.
The good news is that household surveys show that far fewer people are struggling to make ends meet than they were a decade ago. The bad news is that the housing crisis has made forming new households far more difficult.
The traditional solution for left-wing political parties to an equity issue is redistribution:
taxing the wealthy to give benefits or breaks elsewhere.
Unfortunately, the housing issue is just too big to fix without doing something really radical. The crisis is so pressing that all other advances will count for very little until we solve it.
Any party, regardless of its outlook, that wants to tackle housing properly will need creativity, serious intellectual firepower, and the political courage to face down the vested interests that will be disturbed by any change to the status quo.
It will also need an electorate with the wisdom to reward these attributes, rather than balking at the first sign of discomfort and reverting to short-term individual interest.
Ciarán Casey is an economics lecturer at the University of Limerick. He is author of ‘The Irish Department of Finance, 1959-1999′ (IPA, 2022) and ‘Policy Failures and the Irish Economic Crisis’ (Palgrave MacMillan, 2018).
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