Dr. Conor O'Toole:

I will pick up on two points from Deputy Ó Broin's questions that are relevant to the work we are doing. First, I reinforce Dr. McQuinn's comments in that the research we published earlier in the summer in considering housing affordability made it clear that the issues in the housing market were structural, relatively speaking, rather than cyclical. It is particularly important as Brexit would be a cyclical shock, although it might change some of the structural economic relationships. What we have seen from the financial crisis to now is generalised under-provision of social and affordable housing in the economy. What we have been calling for in a number of our economic commentaries is a long-term structural commitment to providing a very large layer of social and affordable housing. That is not a cyclical matter. It is very clear when we consider the data. For example, the study indicates that in the private rental sector households in the bottom 25% of income distribution spend, on average, 50% of net income on housing.

It is quite a heavy burden on those types of households. Then, we get a big shock like Brexit and we are asking whether our suite of policies are fit for purpose in terms of mitigation strategies. Certainly, having a suite of housing delivery solutions that is invariant to the economic cycle allows one to have a buffer that allows one to manage these things. As Dr. McQuinn has said, we are well below the structural demand levels in terms of the number of completions. If we see that slowing again, if the private sector faces heightened credit constrains or other difficulties, then the State can step in and, possibly, ramp up its activity to ensure that we provide this component of the market, which is critically important.

An area of information that is relevant to understanding how Brexit may have a direct impact on the housing market is the supply chains in the construction sector, and whether particular products may be more affected relative to others. Let us consider, for example, some of the information from the CSO this morning, particular regarding types of product groupings such as plumbing or electrical fittings and prefabricated buildings. Nearly 50% of our imports of these types of products come from the UK. There may be vulnerabilities in specific product areas that may make disruptions to the supply chain greater in housing than in other areas. We have not done detailed research work on that aspect it is something that could be examined in a lot more detail. The reliance on wood and wood products from the UK is quite high at about 30%. These are structural trading relationships that will come to the fore in terms of trying understand the impact of Brexit. For example, if there was a heightened tariff regime, there is the question of what would be the likely impact on these types of products.