According to a recent analysis by property advisor Savills Ireland, the country faces the most severe housing shortage in the world, with a population growth rate far outstripping new housing developments. The report reveals that from 2015 to 2023, Ireland added 3.8 people for every new housing unit built, a ratio nearly four times higher than the global average and significantly worse than other countries surveyed.
This troubling statistic places Ireland at the top of the list of countries struggling with housing shortages, surpassing Spain, which has a ratio of 3.4 people per new unit, and Canada, with 2.9. The UK and Australia, by contrast, fared better, with ratios of 2.1 and 1.9, respectively. The United States and Germany also showed more favorable ratios, with 1.5 and less than one person per new housing unit, respectively.
Savills attributes Ireland’s dire housing situation primarily to its rapid population growth, which stands at 1.5% annually. This rate of growth is matched only by Canada and Australia among the countries analyzed. Despite Canada’s similar population growth rate, it struggles with a 2.9 ratio of people to new housing units. Australia’s ratio is better at 1.9.
Spain’s high ratio is largely due to a lag in housing supply rather than rapid population growth, with only a 0.5% annual increase in population. Spain’s housing delivery, at 90,000 new units last year, is seen as a benchmark for Ireland, which has a much smaller population of 5.2 million compared to Spain’s 48.6 million.
Germany’s lower ratio of 0.9 reflects its slower population growth, driven primarily by immigration rather than natural increase. Ireland, on the other hand, has the highest natural population growth rate in Europe, compounded by strong economic-driven migration.
John Ring, Director of Research at Savills, highlighted that Ireland’s unique combination of factors—delayed population boom, high migration due to economic growth, and legacy issues from the Celtic Tiger era—has resulted in its unprecedented housing supply shortage. “Ireland’s situation is markedly worse compared to its peers, necessitating a more aggressive approach to increase housing supply,” he said.
The report also examines the impact of this imbalance on housing affordability. Between 2015 and 2022, Ireland saw a 27% rise in income, while residential purchase prices surged by 66%, creating a significant affordability gap. Although this differential places Ireland fifth among the nine countries studied, it is still significant. In Canada, for example, prices increased by 104% while incomes grew by just 23%.
The Central Bank of Ireland’s mortgage lending rules, introduced in 2015, have played a role in moderating price growth by capping borrowing limits relative to income and property value. While these rules have helped stabilize the market, the severe supply shortage has shifted inflationary pressures into the rental sector, exacerbating demand and driving up rents.
Savills concludes that while Ireland’s regulatory measures have helped avoid a repeat of previous housing market crashes, they have not alleviated the fundamental issue of inadequate housing supply.
