The Department of Finance published updated macroeconomic forecasts with the Stability Programme Update (SPU) in April. GDP is projected to expand by 3.9 per cent overall in 2019 and by 3.3 per cent in 2020. Growth at these levels ensures that Ireland is one of the fastest growing countries in Europe.
Ireland’s strong economic performance has manifested itself in the labour market. The level of employment increased by 81,200, or 3.7 per cent, on average in the year to Q1 2019. As a result, there are now more people working in Ireland than ever before at 2.3 million. Encouragingly, the vast majority of employment growth was in full time positions. Economic growth has also allowed the Government to run a budget surplus in 2018, the first in over a decade.
The positive economic conditions have resulted in strong wage growth, which in turn has fed through to more people being able to purchase a home for the first time. For example, there were over 37 per cent more first time buyer purchases in Q1 2019 than there were in Q1 2016. Residential construction has increased during this time.
Notwithstanding these positive developments, the Government recognises that there are affordability constraints on first time buyers and has implemented a number of measures to assist, such as the Help to Buy Scheme and the Affordable Purchase Scheme. The best approach to improving affordability in the long term is to increase supply. The Government has put in place a number of significant initiatives to achieve this including a record allocation for housing provision to the Department of Housing Planning and Local Government in 2019, as well as the establishment of the Land Development Agency, Home Building Finance Ireland and changes to the tax system in the form of the vacant site levy.