Haven't you heard? There was apparently a massive housing shortage in the Republic of Ireland up until the financial crisis hit.
This article by a real estate professional from 2007 mentions the word
shortage several times, and states:
Politicians won't face up to the root cause of rising rents and rising prices, namely the shortage of supply caused by an inefficient and anti-development planning system.
Unfortunately, history has proven that the author was, well, completely wrong...
As one who has been involved in the Irish property market for 40 years and has experienced every type of market scenario, I am totally convinced that the market is currently in good shape and that anyone buying now will do extremely well in the years ahead. There is no better investment than Irish property at present, and I believe that I will be proved right in this conviction.
The trouble that Ireland had was that the housing bubble took down the banks, and the government stepped in to guarantee the loans. This socialised the losses, and drove up the country's national debt from relatively low in EU terms to one of the highest.
The austerity package and tax rises have fallen on the general population, as the multinationals who take advantage of the
Dutch Sandwich loophole lobbied very, very hard for the government to keep corporation tax low.
So it was that initial decision not to default that wrecked Ireland's fiscal position.
I'm very much of the opinion that the best response to the GFC was Iceland's.
They were basically screwed by the British and Dutch governments over liabilities in accounts held by their nationalities in Icelandic banks. Icesave was popular with savers here in the UK, for example.
What happened was that both governments guaranteed all deposits by their savers in Icelandic banks in full, whereas the UK had a limit of £35,000 (I think) at the time. So the protection was far more generous than they offered their own population in general. They then passed the bill onto the authorities in Iceland...
There was a referendum, and the locals basically said, "Nope, Iceland isn't paying." There were various defaults, the currency collapsed, and the country had a really tough time for two or three years.
Guess what, it's starting to turn itself around. Unlike most of Western Europe.