With prices to purchase or rent homes in Ireland at yet another all-time high, the cost of housing is having far-reaching impacts both socially and economically. For the jobs market, there is pressure on employers to raise wages, while employees are willing to change jobs in search of better salaries and progression, in order to get on the property ladder. In the wake of the pandemic, the “Great Resignation” is seeing a candidates recruitment market with fierce competition to retain talent, and labour shortages across many industries. At CareerWise, we are recruitment specialists with expert awareness of the influences and pressures on the world of jobs. Here are our thoughts about the effect of housing prices on the jobs market in Ireland in 2022.
According to the myhome.ie Q1 Property Report 2022, there has been no let-up in the pressure on property, with a 12.3% rise in property prices nationwide in the first quarter of this year. The lack of supply (there is a record low of only 11,200 homes listed for sale nationally on MyHome.ie.) combined with continued demand means they forecast that this upward price trend will continue. This pressure translates into the rental market too: according to the latest report by daft.ie, average rental prices in Ireland have reached a record high for the tenth quarter in succession. The average cost of renting in Ireland is now €1,334 a month, a figure 30% higher than the peak figure in 2008. In May, the Irish Times reported that there were only 851 homes for rent nationally on the daft.ie property website.
Ireland’s strong labour market is only stoking house prices. With talented employees finding their skills in high demand, wages are rising – with average pay growth now running at 5.4%. With strict Central Bank rules binding mortgage lenders, it is clear that income growth is driving greater mortgage debt, rather than higher-risk lending. A report by Ronan Lyons concludes that 1-2 years after 1,000 extra jobs have been created, monthly rents in nearby properties will be between 0.5% and 1% higher. The effect on property prices is at least 2% (although statistically, the correlation is less consistent).
The requirements for getting a mortgage also put more pressure on the job market. Lenders generally accept applications from two employed adults on good wages – those who fall outside these specifications will likely have greater difficulty in getting a mortgage. So there is a huge incentive for prospective homeowners to focus on climbing the career ladder, and most would be very willing to change to a higher-paying job in order to buy a home.
However, despite all these pressures, there are also societal changes that might help employees struggling to afford a place to live. Remote working has become much more common, allowing workers to move out of more expensive areas. Trading the city for the countryside and remote working has the added benefits of no commuting and potentially better quality of life, as well as lower house prices.
But this isn’t a straightforward benefit for potential employees. Dublin companies, which traditionally pay higher salaries, are now able to recruit from a much wider area, meaning those still paying expensive city living prices face increased competition for roles that can cater to their living costs. Companies in rural regions are being priced out of hiring local talent who can now work remotely for Dublin firms. The wage gap between city and country is increasingly out of balance with employee needs.
However, there are some signs internationally that the housing market is about to turn. With interest rates increasing and the cost of living rising, buyers seem likely to become more restrained New Zealand has had a similar housing surge to Ireland, with a lack of affordability and rising prices for the last decade. However, according to the Irish Times, New Zealand has just experienced their biggest quarterly price drop in ten years, and it seems possible that Ireland may follow suit. But any cooling in the market will take time, and that will provide little comfort to those who need a solution for their living situation now.
With the increased cost of housing putting ever more pressure on the cost of living, many employees are searching for roles with better wages. If you need career guidance, get in touch with CareerWise today.
As Ireland’s leading specialist recruiter for the engineering, supply chain, science, pharmaceutical, IT and accounting industries in Ireland, we are experts in helping talented candidates achieve their career goals.
Contact us online now or call us on +353 (0) 21 206 1900 to arrange a consultation.
Joe Robbins is co-founder of CareerWise Recruitment. A graduate of the University of Limerick (Degree in Business Studies, 1985), Joe worked in the UK for five years where he specialised in materials management, production management and plant management for a number of companies.
He returned to Ireland in 1992 to become Operations Manager for a Cork-based start-up, FMC Automotive Division which was subsequently taken over by Snap-on Equipment. Joe managed the business re-location of this company to Shannon in 1997 before setting up CareerWise Recruitment in 1999.
He is a committee member of the Chartered Institute of Personnel and Development (CIPD) Mid-West region, and a former Director and Vice President of the Shannon Chamber of Commerce. Joe is former Chairperson of the Sixmilebridge Camogie Club and current Chairperson of the Clare County Camogie Board.