What hope for students amid our housing crisis?
The Ronan Lyons column
Last month, the latest Daft.ie Rental Report showed just how bad the market is for today's renters. Rents are now up by 70pc in Dublin from their lowest point, in late 2010, while elsewhere in the country they have risen by 45pc on average - although this hides significant variation by county.
Not only do rents continue to increase, they are doing so at a faster rate: for the fifth quarter in a row, rents rose by at least 10pc year-on-year. It would be a brave civil servant who would argue that Rent Pressure Zones are working.
As ever, prices are only a symptom, though. The underlying cause is a lack of supply. There were fewer than 3,000 properties available to rent nationwide on August 1 this year. That is not only down almost 20pc on the same date a year earlier, it is also the first time ever that fewer than 3,000 homes have been available to rent.
The last time the rental market was experiencing anything like this was in early 2007, when rents were increasing at roughly 11pc per year. Even then, though, there was an average of 4,800 properties available to rent at any one time, roughly half those in Dublin.
Now, though, availability in Dublin is close to 1,000. Comparisons with 10 years ago also understate the issue: the number of people renting has risen by more than 50pc. If 5,000 homes to rent was a tight market 10 years ago, the equivalent tightness today would be 7,500.
This sort of rental crisis is unprecedented and is clearly linked to the homelessness crisis. Healthy housing markets are built on a number of key ingredients. One of these is the presence of sensible mortgage rules, which we had through the Building Society system from the 1860s until the late 1980s, and again since the Central Bank rules were introduced in 2015.
A second key ingredient is a responsive social housing sector. Ireland had this more or less from independence but it was dismantled steadily from the 1980s on. By the mid-2000s, loose lending was taking the place of social housing.
But we now have a combination of mortgage rules but no social housing. Never before in post-war Ireland have we had this combination, which is what makes the homelessness crisis so severe.
Into this environment step our fledgling households, those starting college for the first time this month. What chance do they have? Many students are already choosing not to study in Dublin, even if a course there offered them the best prospects, because of the cost or the lack of a home. Many more are commuting very long distances to try to make things work.
As a society, we should be happy with neither of these as solutions. Even leaving aside the potential for higher education as a lucrative export industry, we should be trying to ensure our students have the supports necessary to fulfil their potential.
What is obvious from a quick glance at the figures is that we are failing them, particularly when it comes to their accommodation. In the UK, roughly half of all students who don't live with their parents live in purpose-built student accommodation, either on- or off-campus.
In Ireland, roughly 35pc of students - rather than the 10pc seen in the UK - live at home with Mammy. Of the remainder, only a small fraction - a little more than 10pc - live in purpose-built student accommodation. This, of course, puts pressure on the wider rental sector, as students group up and take family homes out of circulation.
What is truly frightening to me, as an outside observer, is how ill-prepared our policy-making system is for the future. We know from demographics that the number of third-level students is set to grow by at least 50pc over the coming decade. Factoring in likely increases in enrolment and in net migration, as well as the targeted increase in non-EU students, student numbers in Ireland may double over the coming 15 years.
Suppose we allow for one-third of Irish students to stay with Mammy. Even reaching the UK ratio of one student in purpose-built for every student in the wider rental sector would mean a dramatic increase in purpose-built student housing over the coming decade.
The country needs to plan for having 100,000 units in purpose-built student accommodation by 2025. It currently has about one-third of that. Put in its simplest terms, Dublin needs to be seeing a new block of 300 student beds opening every month for a decade, while the rest of the country as a whole needs to see roughly the same.
But with Dublin City Council already seeking to change the rules to make it easier to say no to proposals for student beds, what are the odds that this will happen? Sadly, unless a change in mindset happens fast, we are likely to read grim news on student housing and the rental sector for some years to come.
- Ronan Lyons is assistant professor of economics at Trinity College and author of the Daft.ie Reports