ONE of the city’s leading business figures has said the lack of housing in the region is ‘choking economic growth’.
John Mullins, former CEO of Bord Gáis and current chairman of the Port of Cork, made the comments after a new report showed rental costs continuing to soar in Cork city and county.
“The worry for me is if we had a major IDA announcement, exactly where are we going to house the people?” he said.
“I had a personal example of it recently, as president of the Alliance Francaise. We had a new director over from Australia and we found it practically impossible to find a place for him. You would think €1200 would get him a two-bedroom apartment in the city centre and he ended up with no choice than to move into a place costing €1800. I would say we are getting near a critical stage.”
Mr Mullins said initiatives like the Rent Pressure Zones don’t do anything to increase supply and said the Government needs to prioritise incentives that will provide desperately needed housing.
“The problem is we haven’t built apartments for a very long time, the only things being built are student accommodation,” Mr Mullins said.
“That is not going to do anything for returning emigrants who want a home for their kids or for foreign nationals who want to work here in new jobs in places like Apple and EMC. They are all struggling to find a place to live.
“My sense is that the biggest threat to economic growth in our region is the lack of a housing supply.
“Think about tradespeople for example. How are you going to attract back an electrician, or fitter or plumber from Australia or Canada if there is no housing?
“Or if they do get housing the salary is not commensurate with the price of housing. And if you don’t have the tradespeople you can’t build.”
Mr Mullins said the current crisis qualifies as an emergency and therefore emergency measures are needed.
He suggested a mixture of a carrot and a stick approach with developers, with tax breaks for construction but increased penalties for sites left unused.
“Something has to give and unless we get the supply side sorted we are going to have a lot of trouble,” he added.
“There are a number of sites around the city that we could build on but for whatever reason, whether it is the council or attractiveness for developers, they are not being built. I think this is the crisis of our day and our economy will go rocking back from 7% down to 1%.
“Throw Brexit on top of that and we are going to have trouble.” The average rent in the city is now €1301, up 13.7% on the same quarter in 2017.
In the rest of Cork, rents were on average 10.1% higher in the third quarter of 2018 than a year previously. The average advertised rent is now €941 in county areas, up 61% from its lowest point.
Nationwide, rents rose by an average of 11.3%, representing the tenth consecutive quarter in which a new all-time high for rents has been set. Rents in Ireland are now 30% higher than they were at the peak of the Celtic Tiger.
The biggest rise in Cork rents was in larger houses. The average rent for a five-bedroom home in the city is now €1,579, up 20.2%. But every type of housing showed an increase, with a one-bedroom apartment in the city now commanding an average €972 in rent.