Beware: Dublin’s economy is cooling

After several years of blockbuster growth, Dublin’s economy, traditionally a bellwether for the rest of the country, is cooling. The latest Dublin Economic Monitor highlights several key indicators which point to a fall-off in activity in the capital.

The report, prepared by EY DKM Economic Advisory, notes that year-on-year growth in Dublin house prices has been moderating for several months and that prices actually fell on a monthly basis in November for the first time in several years. It highlights that month-on-month growth in passenger arrivals at Dublin Airport was flat for several months last year while Dublin Port experienced consecutive quarterly declines for first time since 2009. Passenger trips on Bus Éireann and Dublin Bus also decreased in the final quarter of last year.

It’s inevitable that the post-2012 rebound moderates at some point, it’s just not obvious that we’ll now revert to a more stable pattern of growth, particularly with the Brexit cloud on the horizon.

Workforce

On the upside, the report notes that an additional 150,000 people have been added to Dublin’s workforce since 2012, bringing it to a record 696,200, which corresponds to roughly one third of the State’s total workforce.

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Despite the slowdown, it insists the economic outlook remains positive, citing recent jobs announcements by Salesforce and Facebook as evidence of the economy's enduring strength.

Nonetheless, it pinpoints housing as a “persistent issue, hampering potential growth”. It indicates that close to 5,000 homes were completed in Dublin in the first three quarters of 2018, but that this falls way short of demand.

“This phenomenon may be feeding into the skills shortage observed in Dublin with high rents [in excess of €1,600 per month on average] acting as a barrier to employers attracting talent from overseas in particular,” it says.

The American Chamber of Commerce has identified the need for 32,600 new apartments in Dublin by 2022 to sustain new jobs in multinational companies. Meeting these targets will be a challenge, the report says.