Ireland's households have €160bn in savings. Could it be used to solve the housing crisis?

As Irish households save billions, experts propose channelling funds into state-backed housing and infrastructure investments for long-term gain

Irish households saved €8.2bn in early 2025 — now experts want to use it to fix the housing crisis. Picture: Denis Minihane.

As Ireland grapples with a worsening housing crisis marked by soaring rents, a shortage of supply, and rising homelessness, construction industry bodies are pointing to an untapped resource that they say can help with long-term planning.

New figures released by the Central Statistics Office (CSO) this week found that before adjusting for seasonality or inflation, Irish households saved €8.2bn in the first three months of 2025. For reference, the State allocated just over €5bn to housing in 2024.

The saving rate of Irish households, reported to be 14% at the beginning of this year, has remained consistent for the last two years, driven by wage increases and falls in unemployment, which have led to a growth in household income.

In total, Irish households’ bank deposits amount to almost €160bn, with the low interest offered on savings accounts ensuring very little return for depositors. Irish banks have been notably slow in raising the rate of interest on deposits, with eight consecutive rate cuts by the European Central Bank putting further downward pressure on interest rates.

“The establishment of a state-backed housing investment vehicle could play a key role in addressing the housing crisis,” the Society of Chartered Surveyors Ireland has said, pointing to what it says is a mutually beneficial initiative for both households and the Government.

Similar to schemes operating in countries like France, the society says such a scheme would enable the Government, which is constrained by the windfall nature of its corporate tax revenue, to put long-term, multi-annual housing plans in place, while at the same time facilitating investment in much-needed infrastructure projects.

Gerard O'Toole President of the SCSI.

“Irish households’ bank deposits amount to nearly €160bn, mostly in low-interest current accounts,” said the society’s new president, Gerard O’Toole.

“At the same time, access to finance remains a major barrier, especially for small and medium-sized developers.” The State needs to explore alternative and diversified funding streams, Mr O’Toole said, adding that the Government’s current level of investment in housing is not sustainable in the long term.

“A savings fund of this nature would underpin long-term planning by providing the multi-annual funding commitments housing projects require,” he said.

“It could also support longer-term budgets for several state housing schemes, including help-to-buy and vacant property grants, which are often subject to annual funding reviews and decisions.” But housing is just one avenue that could benefit from unlocking household savings. The European Commission is also seeking to channel savings into productive investments, adopting a new strategy earlier this year which aims to increase EU citizens’ participation in capital markets.

On an EU basis, about 70% of household savings, worth around €10tn, are held as bank deposits. The commission is currently under pressure to boost the bloc’s competitiveness following the eye-opening findings of the Draghi report, which warned of the growing innovation gap between the 27-member bloc and the US.

Former ECB president Mario Draghi.

The commission needs to unlock new funding avenues to support homegrown businesses, particularly in the tech sphere, where Europe has largely fallen behind.

“The EU must unlock its potential to achieve its goals linked to competitiveness, security, and digital and green transitions,” the commission said.

“By developing an integrated banking system and capital markets, the savings and investments union can bridge the gap between savings and investment needs.” As the EU sees it, households should have the opportunity to hold more of their savings in higher-yielding capital-market instruments.

It also notes the indirect impact this will have on a consolidating banking sector, which, due to its rising concentration, has seen less competitive rates offered to consumers. With more high-yield, government-backed investment options on the market, banks will be forced to increase the rates offered to deposit holders.

This week’s data from the CSO suggests a significant opportunity for the State to explore mechanisms to mobilise household savings. Construction bodies, the Irish Government and the European Commission have all emphasised the need to channel household savings into productive investment, but realising this potential will come down to effective coordination between the relevant institutions.