Irish housing crisis derails Varadkar's re-election bid

Nine years after a devastating crash in property prices catapulted the party of Irish Prime Minister Leo Varadkar to power, a housing market recovery too rapid for many threatens to dump it into opposition at this week's general election.

The property recovery under Varadkar's center-right Fine Gael party helped lay the foundation for Ireland's transformation from bailed-out basket case in 2010 to the fastest growing economy in Europe for the past five years. But the boom has left a generation struggling to afford rents that are higher on average in the capital Dublin than Tokyo, Sydney or Singapore while house prices have surged 86% in seven years.

A scarcity of housing has become the defining issue of the campaign, with daily stories of low-income families stuck in temporary accommodation such as hotels waiting for social housing and workers in their 30s living with their parents. In every opinion poll so far, Varadkar's Fine Gael has trailed fellow center-right party Fianna Fáil, its main rival long vilified for being in charge during the bust a decade ago.

At the weekend, Fine Gael fell into third place for the first time, behind Irish nationalists Sinn Fein, the country's largest left-wing party, which has built its campaign around housing. "I have never felt before such a movement of anger towards the government," said Mary McCormack, a 61-year-old homeowner, whose 34-year-old son is living at home and considering emigration as the only option to save a deposit to buy a house.

"He's got a good wage, he saves his money but he can't afford to step onto that ladder. A man that age should have his own place," said McCormack, who plans to vote for Sinn Fein. HOUSEBUILDING COLLAPSE

Mortgage-holders bore the brunt of Ireland's property crash in 2008 when house prices more than halved. That led to all Irish banks but one being nationalized and an international bailout - followed by Fine Gael's election victory in 2011. A collapse in housebuilding since has helped lift property prices to just 17% below their peak - easing the plight of homeowners and the largely state-owned banks who lent to them.

But the lack of supply has hammered renters, who are paying 40% more than at the height of the Celtic Tiger boom, according to property website Daft.ie. Average rents in Dublin are now nearly 1,800 euros ($2,000) a month, almost double 2011 levels. Almost 10,000 people are living in emergency accommodation and considered homeless, according to government data.

"There's no doubt the lack of available rental accommodation has become a real burning election issue," said Sinn Fein housing spokesman Eoin O Broin. While all parties agree rents need to stop rising and house-building needs to increase, they are divided on how much the state should intervene in the private market.

The government has established "rent pressure zones", where increases in rents are capped at 4% a year, but other parties are calling for a rent freeze and a ban on evictions. While Fine Gael has put in place programs to help young people buy their first home and to reduce the cost of building, they have shied away from the mass state-funded construction of social housing advocated by left-wing rivals.

Fine Gael argues that opposition promises are unrealistic and some could push private investment out of the market. "Don't take advantage of the genuine anxieties those who are renting have, don't take advantage of the concerns that young people have about their ability to buy homes in the future by putting forward plans that we might not be able to deliver," Finance Minister Paschal Donohoe told Reuters.

LACK OF TRUST Fine Gael's attempts to refocus the campaign away from housing to the booming economy and the government's success, so far, in preventing Brexit from creating a hard border on the island of Ireland, have foundered.

Just 3% of potential voters identified Britain's departure from the European Union as the key issue in a poll last month while housing and health were cited by almost three out of four. Another poll found only 12% thought Fine Gael was best equipped to manage the housing and rental crisis, about half the level of its main rivals.

On one of the first days of campaigning, headlines were dominated by a homeless man being badly injured when Dublin city workers cleared away the tent he was sleeping in - right by a poster of Fine Gael's housing minister. Housing charity Focus Ireland, which last week opened a center for the country's record number of homeless families to wash clothes and get something to eat, has been critical.

"There are a large number of families who have never experienced homelessness before who say I can't believe that this has happened to me. They're completely unprepared for it," said Mike Allen, director of advocacy at the charity. While the government cannot be accused of doing nothing, "they have not done nearly enough to recognize how very, very deep-rooted this problem is", Allen said. ($1 = 0.9014 euros) 

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