As the economy grows, attention will turn to factors that can hinder progress or sow the seeds of future problems, and housing has emerged as one of the biggest concerns, says TOM DUNNE.

This is not surprising given the need to accommodate a growing workforce, some of whom will be returning emigrants. There is also the effect on competitiveness resulting from pressure to increase pay to compensate for increasing rents and mortgages. There seems little point in reducing taxes to encourage returning emigrants if the money saved will be gobbled up in increasing housing costs, thus reducing standards of living and making Ireland less attractive for the emigrants the Society hoped to influence in the Christmas campaign run with ConnectIreland and mentioned on page 31.
In discussions about housing, much analysis has been done about the effect of the planning process and development standards on cost, and the macropru rules of the Central Bank on demand. Thought has also gone into the lack of finance for development. Inevitably, attention will turn to the cost of building a house, the question on the front cover.
But this is a complex issue with effects flowing from a number of sources not immediately obvious. These include small volumes of output reducing the ability of builders to benefit from returns to scale of production. Also, as a relatively small economy on an offshore island at the end of a supply chain, materials will be more expensive, particularly where they have to be acquired from local suppliers who have to add on their margin.
Labour costs too are receiving attention, but as Norman Higgins notes on page 8, Eurostat indices for residential construction costs across EU countries indicate that Ireland is well below the average, with only Greece, Croatia, Cyprus, Poland and Montenegro being cheaper in 2014. This subject needs more research before firm conclusions can be drawn.
Housing is a problem that has to be addressed convincingly by the next government. Readers of this Journal can make up their minds about the resolve of the main groupings offering themselves for election from their answers given to housing questions in this edition. I am not persuaded that the remedies are there.

Tom Dunne

Tom Dunne

Editor