DUBLIN (Reuters) – Leo Varadkar returned as Irish prime minister on Saturday to again face the intractable housing crisis that cost him a full second term and made Sinn Fein clear favourites to unseat him in 2025.
Varadkar, prime minister from 2017 to 2020, takes over from Micheál Martin under a coalition deal struck between their two once sworn rival parties that will also see a new finance minister appointed and a likely change in the foreign office.
Halfway through their term, the centre-right led coalition are still struggling to get on top of the housing affordability issue that led to a surge in support for Sinn Fein at the 2020 election and has handed the former political wing of the IRA a consistent opinion poll lead of around 10 percentage points.
“Housing really sets itself apart at the moment in terms of the issues that are dominating,” said Theresa Reidy, head of government and politics at University College Cork.
“The big question is whether government housing policy can substantially deliver in the next two-and-a-half years. Given the fact that housing is an endemic issue in Ireland, it’s very hard to see that being the case.”
Varadkar, Ireland’s youngest and first gay premier, will also find another familiar issue is his in-tray, the long-running dispute between Britain and the European Union on post-Brexit trade rules for Northern Ireland.
Basing his last re-election campaign on Brexit backfired and Reidy said the coalition’s steady management of COVID-19 and a bumper budget package in October to alleviate the worst of the cost of living crisis have done little to improve their ratings.
Indicators on the crucial issue of housing supply are also “turning at the wrong time from a political perspective”, said Goodbody Stockbrokers chief economist Dermot O’Leary, pointing to the reversal of an elusive jump in housing commencements amid cost inflation and labour scarcity pressures.
While completions, which collapsed a decade ago following a property crash, are set to rise by over a third to 28,000 this year, they remain short of the more than 33,000 the government says are needed just to catch up with demand.
Most analysts now expect completions to fall in 2023 and the state’s inward investment agency again warned this week that housebuilding needs to accelerate if the economy is going to keep attracting foreign multinational jobs.
The left wing Sinn Fein, looking to enter government on both sides of the Irish border for the first time and push for a vote on Northern Ireland leaving the UK, has based its attacks on the government almost exclusively on its housing policy.
O’Leary said the trends point to a continued rise in rent prices – already way past record levels – and further upward pressure on house prices, which earlier this year returned to levels not seen since the credit-fuelled peak of 2007.
“Those negative supply trends will become more visible when the crucial time of getting re-elected comes about,” O’Leary said.