Internal IDA documents raise multinational concerns over “clear market failures” and “constraints” in Irish residential property market

By | 27th November 2018

THE IDA prepared a series of briefing documents for their executives after multinational companies raised concerns over “constraints” and “clear market failures” in the residential property market.

Executives from the IDA were advised to say that the country’s housing shortage was “not unique to Ireland” in the guidance documents.

The investment agency prepared a series of briefings for staff on what to say when issues around rising property prices, spiralling rents, and homelessness came up for discussion.

Copies of the briefings reveal that the IDA prepared data showing that monthly rents in Dublin were still competitive by international standards.

According to the latest briefing report from September, the price for a small “one person apartment” in Dublin came in at just above €1,000 per month.

Taking figures from the Nestpick ‘Furnished Apartment Index’, this meant Dublin was almost half the price of San Francisco, and significantly less than other major investment centres including New York, Hong Kong, and London.

The briefings also emphasised that rent prices in regional locations in Ireland were “very competitive”.

While the standardised average rent in Dublin was stated to be €1,436-per-month – the average rents in Cork and Galway were just over €1,000 while in Waterford, it was €674, according to the records.

For property purchases, the briefing said that average residential prices in Dublin – at just over €400,000 – were “competitive compared to competing larger cities”.

Average property prices were at least 50% higher in Paris, Zurich, and Geneva, according to the documents prepared by the IDA.

Ireland did not compare so well to cities like Milan, Prague, and Frankfurt however.

“Regional cities compare exceptionally well to other competing cities,” the briefing said with average prices in Cork and Galway below €200,000 according to their charts.

The briefing also said there were “hugely positive trends” in the residential property market.

It said that first-time buyers in Ireland were in a much better financial situation now than they were at the height of the boom.

“The average first-time buyer working couple uses 21.2% of their net income to fund a mortgage in Ireland – this was 32% in 2007,” the briefing explained.

The briefing also boasted that new home completions had reached 16,274 units over the past twelve months, an increase of 256% when compared to 2013.

Later on in the document, it was pointed out that 2013 had been the “bottom” when just 8,300 homes were completed, and that this had fallen from 77,600 at the start of the recession.

The “key messages” document also said the government had introduced rent pressure zones and was “committed to meeting the demand” for new housing.

The briefings are based on a series of quarterly housing reports that were commissioned by the IDA from the estate agent Lisney.

The reports – which will cost €24,000 over a two-year period – were started specifically because of concerns from large companies about the Irish property market, according to documents obtained under FOI.

One internal record from March this year explained in stark terms why they had been commissioned.

It said: “Due to the current constraints in the residential property market and clear market failures, a number of multinational companies currently in Ireland have indicated to IDA that property and most notably residential property is one factor challenging increased investment in a number of locations throughout Ireland.”

In a statement, the IDA said the briefing documents were prepared to inform executives about housing conditions across Ireland and provide international comparisons.

They said: “Our clients operate in an international context and it is IDA Ireland’s role to consider how we compare to our competitors.

“IDA Ireland’s clients take a long-term view on investment and are continuing to invest in large numbers in Dublin, as evidenced by some of the large announcements made this year.”

They said they believed Ireland’s housing market remained competitive and that it competes with cities like San Francisco, Zurich, London, and New York for foreign direct investment.

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