Housing Minister Simon Coveney’s controversial ‘help-to-buy’ scheme has also been slammed as “counter-productive” by the EU only increasing demand for housing at a time of shortage, while the Government’s rent cap could put off new construction.
The report has found that insufficient housing is causing a surge in homelessness and deterring emigrants from moving back. In its annual staff report on the Irish economy, the European Commission also points to problems in healthcare, water infrastructure, transport, and childcare.
The EU said the housing shortage is having a chilling effect on foreign investment, “as firms have difficulties finding suitable accommodation for employees”. Irish house prices are rising at the second-fastest pace in the EU, quarter on quarter, behind prices in Malta, highlighting growing demand.
“Housing completions remain well below the estimated demand as the construction industry continues to slowly recover,” the report has found.
“In this context, demand-side policies, such as the ‘help-to-buy’ scheme, could be counter-productive.”
The warning comes as the Government is trying to convince the EU’s medicines and banking agencies to move to Ireland post-Brexit, with their combined workforce of over 1,000.
Health Minister Simon Harris said on a trip to Brussels earlier this month that housing shortages and healthcare problems would not affect Ireland’s bid for Brexit jobs. However, the EU says Ireland’s health system is not “cost-effective”, and that “queue jumping” by privately insured patients, as well as a shortage of doctors, adds to long waiting lists.
Ireland faces “severe challenges in providing proper water services”, the report says, warning that the €123m set aside for Irish Water may not be enough to cover the shortfall from the suspension of water charges.
It comes less than two weeks after the EU said it was taking Ireland to court over its failure to properly treat urban waste water in Cork and 37 other towns and cities. There are also “shortcomings” in transport, particularly public transport, which the commission says need to be addressed, while curbing carbon emissions in the sector.
And the EU report says the lack of affordable childcare and paid parental leave is reducing the number of women in the workforce.
Valdis Dombrovskis, commission vice-president for the euro, warned Ireland to “stay vigilant” and keep up reforms to head off a Brexit shock. “We are now living in the times of uncertainty, and one of the factors of uncertainty is Brexit,” he said.