DUBLIN—When Mikey Cullen’s parents were in their early 20s, they earned enough as public-sector workers to buy a house in the city. Today, Cullen is a 27-year-old high-school teacher who lives with his mother.
Cullen had been sharing a house with nine roommates, but he moved back home when he realized he couldn’t afford his own place even in the cheaper parts of Dublin. Renting a one-bedroom apartment, he said, would consume most of his paycheck, and buying something was out of the question because the median home price is eight times his annual salary.
Many Irish of his generation are in a similar bind. Fifty-nine percent of Irish adults ages 20 to 34 were living with their parents in 2022, up from 38% a decade earlier—the largest increase among major European countries, according to a report commissioned by the Irish government.
“The price in Ireland is mental,” Cullen said. “Owning a home isn’t feasible.”
The housing affordability crisis that has frustrated young Americans for a decade has now taken hold in many big cities in Europe and beyond. The common threads: robust job growth, rising demand and not enough new development, causing rents and sales prices rising faster than wages.
Globally, homes are now less affordable than they were in the run-up to the 2008 housing crisis, according to research published by the International Monetary Fund. The research compared median household income with the income required for an average-price home across 40 countries.
The resulting housing crunches are eroding living standards for poor and middle-class workers, intensifying wealth inequality and stoking political tensions.
Ireland, after years of anemic construction, now has the European Union’s most expensive housing, according to a broad measure of rent, maintenance costs and utilities by Eurostat, the European Union statistics agency. Average rent in Dublin doubled over the past decade, while the median home price rose 75%, government statistics show.
Some of the sharpest rental increases have occurred in central and Eastern Europe. In Hungary and Lithuania, rent grew more than 60% from 2015 to 2023, according to Eurostat. And in each of those countries, home prices more than doubled over that period.
The tiny Baltic nation of Estonia posted the sharpest increases in both rents and home prices of any European country over the 10 years through 2022, according to Eurostat. While Estonia’s tech-heavy economy has lifted incomes and living standards, home construction hasn’t kept pace in the capital of Tallinn.
One big issue is red tape, said Madle Lippus, Tallinn’s deputy mayor for urban planning. The time between planning a new housing project and receiving government approval often stretches to a decade, she said, then it can take another five years to build.
Through most of the 19th and 20th centuries, during periods of rapid urban expansion, home construction typically kept pace with population growth. “When cities had housing shortages, if they couldn’t grow outwards, they would grow upwards,” said Samuel Hughes, head of housing at the Centre for Policy Studies, a center-right think tank based in the U.K. But starting in the latter half of the 20th century through today, he said, tight land-use restrictions in many places have prevented construction from keeping up.
“What is striking is that the countries at the top [of home-price growth] are all Commonwealth countries that copied elements of the restrictive British planning system,” said Christian Hilber, a London School of Economics economist.
In the 50 years through 2021, the countries with the sharpest rise in home prices around the world have been New Zealand, the U.K., Canada, Australia and Ireland, according to the Organization for Economic Cooperation and Development.
In Vancouver, British Columbia, the median home price of $1.1 million was 17 times the median household income as of this spring, up from 10 in the early 2000s. British Columbia’s population grew 19% over a 10-year period ending in 2023, but home construction lagged behind, mainly because of high construction costs, according to a September report from the Canadian Centre for Policy Alternatives, a progressive research group. Prices have risen so rapidly that Canada banned foreigners from buying homes.
In Sydney, Australia, where rising construction costs have prompted developers to put many projects on hold, home prices have climbed from nine times the average income in 2019 to 12 times in early 2024.
While higher prices enrich existing homeowners, they have driven up monthly mortgage costs for new buyers and, by extension, rent, in part because more people have been priced out of buying. The average age of first-time home buyers has risen rapidly in many countries, including the U.S., U.K. and Ireland. In the U.S., half of households spent at least 30% of their incomes on rent and utilities in 2022, a record high, according to Harvard University’s Joint Center for Housing Studies.
In Vancouver, British Columbia, the median home price was 17 times the median household income as of this spring, up from 10 in the early 2000s.
In Sydney, Australia, home prices have risen from nine times the average income in 2019 to 12 times in early 2024.© Bloomberg News (2)
Over the past decade, countries with the lowest levels of home building experienced the sharpest rise in home prices, relative to household income, according to a Bank for International Settlements analysis of 11 countries around the world.
Globally, inflation-adjusted home prices rose 32% in the decade through 2021, according to the International Monetary Fund.
“When you draw lines around places and say you can’t expand beyond this, then you force prices up,” said Wendell Cox, a former Los Angeles-area planning official who now serves as a transportation consultant. “The problem is the inability to allow urban housing markets to perform organically, to expand in land area as they grow.”
Politicians in Canada, the U.K., Australia, Germany and South Korea are trying to boost construction by easing rules, including opening up undeveloped land for construction. National governments, though, are hamstrung by state and local rules that favor existing homeowners over renters, Hughes and Hilber said. Homeowners have increasingly mobilized to use those rules to block development out of fear of declining property values, crowded roads and schools and other risks, they said. “Once you’re in this political economy where you have maturity of homeowners and you have Nimby residents, it’s actually difficult to make reforms,” Hilber said.
U.S. home construction boomed in the 2000s but fell sharply after the housing crash, and it’s never fully recovered. Freddie Mac has estimated a supply shortage in the U.S. of nearly four million homes.
Dublin’s emergence as a global economic center dates to the 1990s, when Ireland, seeking foreign investors, slashed corporate taxes. U.S. and other multinational companies moved in, and foreign investors flooded the country with cash. During the credit-fueled housing boom, home construction and prices soared—more so than in many other countries.
When housing crashed around the world in 2007, Ireland’s economy fell harder than most. The banking system collapsed the following year, ultimately requiring a bailout from the European Union and International Monetary Fund.
Developers suddenly lost access to financing and home construction nearly froze. Just 10,500 homes were built a year in the decade through 2018—an 83% drop from the boom in the prior decade, according to the Central Bank of Ireland.
As the financial crisis faded, foreign investment flowed back in, and multinational companies such as Apple and Amazon.com expanded in Dublin. The population grew rapidly, partly through immigration, and the nation of five million became Europe’s fastest-growing economy.
Since 2012, Ireland has had the lowest level of home construction among a group of wealthy nations studied by the Bank for International Settlements.
Developers have been stepping up construction. Today, near Dublin’s center, new buildings line the waterfront in a neighborhood known as the Docklands. High-end apartments with rents starting at 2,500 euros—about $2,640—overlook canals.
The developers need to set prices high to ensure they can cover their own high costs and to earn a decent return for investors, said Bryn Griffiths, a director at Turner & Townsend, one of the world’s largest managers of construction projects.
Developers complain that new regulations and other factors have increased their costs. Ireland drafted rules after the crash to improve the quality of housing. Covid caused a shortage of materials and labor, and Russia’s invasion of Ukraine drove up energy costs. Opponents of developments have turned to courts to block projects.
“That’s logjammed a lot of projects coming through the system,” Griffiths said. “You might have put planning permission in early 2020, then seen a 30 percent increase in construction costs in the period between putting in the planning permission and getting the grant.”
Many young people are leaving Ireland. Despite low unemployment, emigration reached a nine-year high in the 12 months through April.
Cullen, the teacher, said going-away parties have become commonplace. “They didn’t see a life for them in Dublin,” he said. “We love the city—it’s our home. But it doesn’t treat us right.”
He had stopped at a pub after work for a pint of Guinness. The day before, he said, he and his girlfriend had toured a two-bedroom apartment near the airport going for 2,550 euros a month. They hoped to split the rent with another couple. Fifty other people had also applied. When the other couple backed out, Cullen and his girlfriend never followed up on the application.
Cullen said that when he walks the streets of Dublin, often teeming with young tech workers, he doesn’t recognize the place he grew up in. Nightclubs and arts venues have closed, and he frequently sees homeless people and drug addicts rummaging through trash. A recent government report said homelessness had risen in part because of rising rents and a dearth of building of government-subsidized housing.
Although he teaches high-school students, he said, he sometimes feels like one himself, given that he is living with his mother. “It says a lot about society when the teachers, nurses and police—the Garda—are struggling to find a home in the same society in which they serve,” he said.
In many places around the world, housing shortages are creating a generational divide. Longtime homeowners are staying put in their homes as they increase in value. Younger workers are devoting a bigger chunk of their paychecks to rent, or living in their childhood bedrooms.
“A lot of people aren’t reaching their full adult potential,” said John-Mark McCafferty, chief executive of Threshold, a nonprofit group that advises renters and lobbies for tenants’ rights and affordable housing.
Carla Kiely, a 33-year-old in Dublin, said she and her boyfriend each live with their parents because of the steep rent. They spend time together in cafes and parks, and occasionally in a hotel room when they can afford it.
“The number one thing in the way of me starting a family is having a house,” Kiely said. “Raising a baby in my elderly mother’s house doesn’t sound very appealing.”
It isn’t just high rents that dissuade her, she said, but also the potential for a landlord to evict her after a year or two, on a pretext, to jack up the rent on a new tenant.
“The rental market here—there’s no security in it,” she said. “It’s pretty scary.
Ireland is spending more on housing aid, through government-owned apartments and cash subsidies to help pay rent. The number of residents qualifying for aid and the amount of aid per person have soared.
The government has said it is taking steps to address the housing situation and that construction has picked up in the past few years. Lawmakers have introduced tax breaks and government-backed loans to help buyers make down payments and get mortgages.
The high cost of housing, though, remains a political rallying cry. In Dublin recently, the Sinn Féin opposition party covered much of a five-story building overlooking a public park with a sign that read: “Sinn Féin Will Make Housing Affordable.”