Housing crisis ‘jeopardising business growth’ in Cork

A shortage of residential accommodation is jeopardising the growth of businesses in Cork as the housing pinch begins to be felt by companies outside of the capital for the first time.

Employers in the region are starting to struggle with a lack of suitable rental accommodation which is making expansion increasingly difficult, according to the head of PricewaterhouseCoopers’ (PwC) Cork office.

“We have a deficit in the number of houses where workers are going to work. It’s not a nice-to-have, it’s a must-have especially if we’re going to grow... That’s becoming a bit of an issue,” said PwC partner Ger O’Mahoney.

“I think [the problem in Cork] is second to Dublin; it’s not as acute as in Dublin but waiting until it becomes acute means that the horse has bolted from the point of view of business people making decisions.”

Projects planned for Cork were now being deferred over concerns around the availability of skilled workers due to increasing costs, he warned.

The issue brings to the fore again concerns raised in October by PayPal Ireland boss Louise Phelan who claimed a lack of accommodation in Dublin and Dundalk, where its operations are based, was “at crisis point”.

Ms Phelan said the company had resorted to paying staff up to €2,000 in return for them offering spare rooms for rent to new employees as the housing crunch worsened.

She further warned that while the lack of housing was hampering PayPal’s ability to attract staff to Ireland it would also seriously hinder the country’s prospects of creating more jobs through foreign direct investment (FDI).

Those warnings appear to have foreshadowed the deterioration of the situation outside of Dublin and its surrounds as rents soar across the country. Latest figures show average rents in Cork City are up by more than 13% in the past year and by 33% from their lowest point during the economic downturn.

The increase in the rental costs is showing little sign of slowing either with a near-7% rise seen since June, leaving the average rental cost of a three-bed home in the city at €931. The average cost of renting a double-room in the city centre is currently €414 (up 12.2% year on year) and €392 in the suburbs (up 10.4% year on year).

Mr O’Mahoney said there was a level of frustration among companies in the region with the lack of progress made in finding a solution: “A bit of concern, given how strong the issue is on a national stage and that everyone’s aware of it, is that there doesn’t seem to be solutions that have been designed by the actors on the stage.”

Meanwhile, the Association for Expert Mortgage Advisers (AEMA) said the Central Bank’s mortgage lending rules were “escalating rent and supply issues.”

By limiting the number of first-time buyers that can afford to buy a home, the lack of supply in the rental sector is worsening, AEMA chairman, Trevor Grant said.

“While these limits may have stemmed property price growth somewhat over the last 12 months, they have proved too restrictive in the capital, and combined with less than 12,000 new homes being built across the country, the rent and housing crisis is only going to get worse,” Mr Grant said.

Finance Minister Michael Noonan said it would be early next year before the rules introduced in February would be reviewed.