Dublin-centric development ‘unsustainable’, warns ESRI

Ireland’s economy is increasingly being sucked into Dublin at the expense of other regions, the Economic and Social Research Institute (ESRI) has warned.

In a new report, the think tank said the increasing concentration of population and economic activity in Dublin was unsustainable and, if allowed to continue, would accelerate the current gap in prosperity between Dublin and the rest of the State.

The current pattern of development was also likely to place further pressure on housing in the capital and increase the incidence of long-distance commuting, with a knock-on effect on traffic volumes.

Half of all economic activity in the State is generated in Dublin and the capital’s commuter belt now extends into 11 surrounding counties.

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The ESRI’s research, which provides projections for regions and counties across Ireland up to the year 2040, said the lack of second-tier cities in Ireland was reinforcing Dublin’s dominance.

It projected that the share of population in the Dublin and the mideast region will grow from 40 per cent now to 41.7 per cent by 2040, meaning the population in this area will increase from 1.91 million in 2016 to 2.35 million in 2040.

Dublin and the mideast are also projected to have above average growth in the number of jobs available (1.7 per cent annually) while jobs growth is projected to be slowest in the Border, southeast and midwest regions (0.9 per cent).

Rebalance growth

The ESRI’s report said Government policies should aim to rebalance growth by encouraging regional development led by a small number of large urban centres outside Dublin.

“This would relieve pressure in the Dublin region, while still allowing significant growth,” it said.

While the scaling up second-tier cities would provide a greater range of functions in surrounding areas, this could only be achieved by developing the necessary infrastructure within these areas.

“It is essential that affordable housing and other amenities are provided in cities in order to attract people to live there and to avoid further sprawl,” it said, noting the increased scale of the second-tier cities would allow them and their hinterlands to generate more start-up firms and attract more inward investment.

The ESRI's Edgar Morgenroth said: "When economic activity is concentrated in one centre, national economic performance is reduced.

“The lack of scale of the second-tier cities in Ireland reinforces the dominance of Dublin and limits the development potential of the other regions. Investing in second-tier cities is essential to ensure sustainable economic growth outside of Dublin,” he said.

Property prices

The ESRI report comes as ratings agency Fitch says that property prices will rise faster in Ireland this year than in any of the other 21 markets it examines.

In its 2018 global housing and mortgage outlook, Fitch forecasts a 10 per cent jump in prices this year, only slightly lower than the 11.3 per cent rise recorded in the 12 months to last November.

Prices will slow to around 5 per cent next year, it says.

Of the 22 markets analysed by Fitch, price growth in most markets is expected to slow as risks grow with the prospect of gradually higher mortgage rates looming into view.

A separate report from the Society of Chartered Surveyors Ireland (SCSI) forecasts that both rents and property prices will rise by 8 per cent in Ireland this year.

SCSI’s annual property market outlook says rents will rise 8 per cent despite the introduction of rental caps in Dublin and Cork, with most surveyors suggesting the cap has forced a significant number of landlords to exit the market.

On the continuing house price inflation, John O’Sullivan from the SCSI’s residential agency group, said surveyors are concerned at the low level of housing bring built for middle income earners.

The rising price of development land, which is expected to increase by 11 per cent this year, was singled out as one factor leading to price increases.