With higher education teaching starting up once more, the news media are – for a while at least – paying attention to Ireland’s under-25 adult population. A Red C poll this month found that more 70 per cent of adults aged 18-24 are considering moving abroad. While the sample size was small (just 151) and there doesn’t seem to be any similar prior survey to compare the results to, it would be foolish to ignore the sentiment of so many younger adults.

And over the last few weeks, Alice Kiernan’s poem – “My Love/Hate Letter to Dublin” – went viral and not just on TikTok. In it, and in a follow-up piece with RTE, Alice describes the mixed emotions she has for the city she calls her home. With so much in the city to love, it is hard when that city feels like “it is squeezing [her] out”, “hungry” for her money, her friends, her job and her house.

Every September, as my undergraduate teaching at Trinity starts, I ask those I teach for a show of hands for who expects to be in Ireland a few months after they finish their degree, five years after that and in ten years’ time. Without fail, every year when I ask if they will still be in Ireland a year after their degree finishes, only a tiny fraction – well below 10 per cent – raise their hands.

The method is hardly scientific – public ‘voting’ like this can lead to herd behaviour, for one, while this group of students taking economics at Trinity is hardly representative of the wider public – but it goes to the heart of the challenge of Irish economic policy and how that challenge has changed over time.

To me, it also goes to the heart of one of the conundrums of Irish economic policy. Ten years is an almost inconceivably long and unpredictable time when you are in first or final year of an undergrad and – unsurprisingly – lots of hands stay down for this. But many more hands go up, on average, when asked if they’ll be ‘back home’ a decade hence than if they’ll still be here a year from now.

Ireland’s small size means that it has long been customary for Irish graduates to go abroad to ‘skill up’ before thinking about where to settle long term. I finished my undergrad in 2002 and, while we fretted at the time about the post-9/11 labour market, our cohort emerged into a very strong labour market at home. And yet many of the best and brightest in our year headed for London, because this was where the best opportunities were.

Such voluntary emigration, where people leave not because of a shortage of housing or jobs but because opportunities are greater in a bigger city elsewhere, is a new-ish phenomenon and, in large part, likely to be beneficial to those undertaking it, and to the wider Irish economy, rather than harmful. For decades – arguably centuries – Ireland simply could not create enough jobs to keep its native population at home.

A friend tells of the time they and their Masters cohort was asked, shortly after graduating in the late 1980s, to be part of a promotional photo for IDA Ireland, highlighting the skilled labour here. Many of those in the photo had already booked their one-way flight from Dublin and of the 17 or 18 in their graduating class, just two were still in Dublin a year later.

But, with one important episode by way of exception, Ireland over the last generation has not had that problem. The number in work – which had been the same in 1991 as three decades earlier – has more than doubled in the three decades since, with this trend seemingly accelerating since the economy reopened after Covid nearly 18 months ago.

Population trends

Ireland’s problems – and in particular Dublin’s problems – have not disappeared, though. Rather, they have moved from the labour market to the housing market, in particular, and to infrastructure more generally. A country with sustained growth in its population needs to accommodate that growth by investing in new infrastructure, most obviously (but not exclusively) homes. And that label certainly describes Ireland over the last three decades and more than likely will describe it over the next three too.

It has not been the case that the Irish policymaking system completely missed this. But its response showed just how badly it misunderstood Ireland’s changing population. Of almost one million homes built in the two decades to 2017, roughly seven in eight have been homes that are for larger households, with most of those outside our main cities. But my best estimate is that the opposite fraction – seven in eight – should have been built as urban homes for smaller households.

So while the country got increased supply, the supply it got – concentrated in time in the early 2000s, when credit was loose and crucially during a period of extraordinary tax breaks for homes in areas with little long-run demand – was concentrated in, as you might guess, areas with little long-run demand.

Fast forward fifteen years and while the legacy of the post-Tiger crash is, in large part, a think of the past, the legacy of the Celtic Tiger bubble still haunts Ireland’s housing system. It seems that we have entered a new phase of emigration: not one determined by the labour market but instead one determined by the housing system.

A nation of crammers

Our housing system has become one of ‘crammers’, where adult offspring remain at home far beyond either their own plans or indeed their parents’ and where unrelated persons move in together because they have no other option, in a housing system chronically starved of homes for one- and two-person households. The graph accompanying this piece shows the ratio of single-person households, across the entire population, to “crammer” households containing unrelated persons.

In countries such as Sweden and Finland, there are almost ten times as many people able to form their own household as those living with people to whom they are not related. In the Netherlands, the ratio is over 20, while for the thirteen countries other than for which this figure is available, the average is just under 8. Ireland, however, is an outlier, with just two single-person households for every household of crammers.

Worse, this figure is driven in Ireland by older single-person households, many of whom are stuck in homes that are too large for their needs but have no option to move into, say, independent living or assisted living complexes – with the only option for them being a nursing home.

As Peter O’Connor showed in a clear presentation on household size and housing need, at this year’s Dublin Economics Workshop, Ireland has failed its younger population miserably when it comes to giving them the homes they need to start an independent life. The average Irish person moves out of their parent’s home at 28, nine years after the typical Swede and later than every other country in Western Europe.

Over 60 per cent of 18-34 year-olds in Ireland live with their parents, compared to just one in six Danes. And just 4 per cent of Irish 18-24 year-olds in Ireland live alone or with a partner, compared to two thirds of Swedes, over half of Finns and nearly one third of Germans.

We have failed our younger adults in housing. And that failure is – whether this point is popular or not – a failure to provide them with rental housing. It is not financially safe to ask those entering the workforce for the first time to buy an apartment that they may only live in for a year or two. The country needs tens of thousands – possibly up to two hundred thousand – new rental homes, in all major cities and towns, if it is to converge with its high-income peers and, more importantly, if it is to treat its younger adults as precisely that, adults with a right to housing and to start their independent lives and careers.

Viability

The challenge is viability. Mostly by accident – Section 23 reliefs in the Celtic Tiger ramped up costs, in a way which never reversed during the following barren years – but partly by design, Ireland has become one of the most expensive places in the world in which to build a one- or two-bedroom apartments. This is true for both for-profit and non-profit housing and is still true, even if land were not contributing to cost at all.

But improving viability takes time – years, not months. Unfortunately, in trying to solve rapidly what can only be solved slowly, the Government chose in 2015 to target prices, not quantities. By the time it realised its error – in 2018 – and attempted to boost quantities, through ‘Build to Rent’, the political mood had changed and the covid-induced delay in that BTR stock arriving has fed into a narrative that new supply is somehow – bizarrely – part of the problem, instead of the essence of the solution.

In her poem on Dublin, Alice Kiernan mentions that the only time her rent didn’t increase was during the pandemic. However, rents should have fallen dramatically during the pandemic, as demand cratered. The reason they did not was because, ironically, of rent controls. Ireland’s system of rent pressure zones attempts to control rents across tenancies, rather than – as it standard across the high-income world – rents within a tenancy. The result was rent controls preventing rents from falling during a time of weak demand, even as they failed to prevent rents from raising in other years, when demand was strong.

All that said, it is important to remember that, in media, it is typically anger that sells. For all that is written, Ireland is still an attractive place – all in – for people to call it their home. In the year to April 2022, the CSO estimates that over 60,000 more people moved to Ireland than left it.

It might be argued that this hides the departure of Irish-born as those born elsewhere move here. But even for Irish-born, Ireland has gone from net exporter to net importer. In the year to April 2022, nearly 28,000 Irish emigrated from Ireland, out of a total emigration of 60,000. Leaving out the previous 12-month period, which reflect the covid19 lockdowns, that is the lowest figure since the 2000s and down from 50,000 Irish who left in 2012.

Just under 29,000 Irish nationals moved to Ireland in the same 12-month period, though, meaning for the first time since the 2000s, Ireland experienced net immigration of Irish nationals. By way of contrast, in 2012, just 20,000 Irish moved back home.

This is not at all to argue that housing is fine or can be ignored. What it shows is that the labour market – which is in Ireland one of the strongest in Europe – can make people put up with a lot, even a housing system as dysfunctional as Ireland’s. That does not mean we should put up with a grossly dysfunctional housing system that, by accident or design, effectively infantilizes those starting their independent lives and careers.