Dr. Conor O'Toole:

I thank the Senator and Deputy Ó Broin for their comments on the research. I will first deal with the structural versus cyclical issue we concluded in the research and then make a short comment on the middle income earners and how to define housing affordability challenges they may face.

Deputy Ó Broin put the issues relating to the structural versus cyclical conditions very well. We are basically saying that across the period we examined, the problem has always been there for those groups of households. Approximately 30% of households in the private rental sector would be classed as having high housing costs by international definitions. For the low income households in that group, up to 70% would have high housing costs. The inference from the evidence is that these households are in a tenure that is unsuitable to manage their housing cost. We conclude that the provision of an alternative rental model for those households provided within the context of State provision is critical to dealing with the affordability challenge for those households. That has persisted across the period. Since 2014 there has been well documented rapidly increasing private rents due to a number of factors, including excess demand for housing, the macroeconomic recovery and labour market improvements. Regardless of all these fluctuations, this pattern has persisted over time, and it is critical to highlight that.

One of the interesting aspects of the research is that we looked at not only how much people spend but whether if what is left from the income is enough to buy a normal standard of living that we would expect a household to be able to make. Households up to the 40th or 50th percentile of the income distribution - middle income households - would not have enough after their housing cost, in either the private rental or mortgage sector, to buy a standard basket of goods. That is why in the paper we called for the introduction of a definition of housing affordability that would take into account not only the cost of housing in terms of shared income being spent on a monthly basis, but also how much is left afterwards and whether that is sufficient. It is a broad definition that would be able to take these nuances into account. That is an important fact to take from our work.