Are you a member of the squeezed middle, that ambiguous, self-defining tribe who feel they pay for everything and get little back in return? Since the term came into use – it was popularised in 2011 by then UK Labour leader Ed Miliband – its meaning has stretched to include a lot of groups. There are the “Henrys”, high-income, not rich yet younger earners; the “Sandwich generation”, caught between bringing up kids and looking after older parents and Leo Varadkar’s people who get up early in the morning.
At the time, Miliband struggled to define who was included – and perhaps the ability to opt-in has guaranteed the term’s longevity. Whatever way you slice it, it is a large, mainly urban, middle-ground who feel they are missing out on the gains of economic growth. And this has been a big political factor across the industrialised world.
This concept of the “squeezed middle” in the Irish housing market was identified by the Commission on Housing, whose 2024 report put it as applying roughly to households earning between €40,000 and €90,000. Too well off to apply for social housing, but not earning enough to survive in the private market, they have few clear routes into the housing market.
The Commission found that this group has “the greatest potential for being left out of access to home ownership given income levels, current housing supports and delivery costs for new housing.” Revenue figures show that around one million earners – including single people and couples jointly assessed – are in that group in terms of income, though of course many will already be owning or renting.
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A report this week from the Society of Chartered Surveyors Ireland (SCSI) found a similar phenomenon when you do the sums today for the apartment market, with affordability continuing to worsen and salaries north of €108,000 required to be able to afford to buy most apartments. Only in the case of a minority of apartments – where prices under €500,000 mean buyers qualify for State supports like Help to Buy – do the figures come down significantly.
This leaves the majority of earners locked out of the apartment market in terms of buying and only the top 20 per cent earning enough to rent. Some with gross incomes up to around €80,000 to €85,000 may qualify to apply for a cost rental property, which are State-supported developments where rents must be at least 25 per cent below market level. But renting will not be the preferred route of many and for now anyway demand for these homes already hugely exceeds supply.
For houses, there may be more options, but the choice for young urban middle earners is usually to go well outside the city centre to find a property under €500,000, qualifying for supports, or battle in the second-hand market where there are reports of long queues outside houses going for open viewings.
Greater supports to help the significant number of people on middle incomes cost an awful lot of money – and it can be hard to target those who really need the help. Analysis of the Help to Buy scheme, for example, that offers an income tax refund of up to €30,000, shows that many of the beneficiaries could have purchased without the scheme. It acts more as a liquidity boost than an affordability fix.
Supports for developers to provide apartments can help make them viable, as the SCSI report points out. But it costs a whack of State money and the cost of building – and thus the cost to the purchaser – remains high. More affordable home or cost rental properties are the longer-term solution, but the barriers to ramping up supply are, as we know, considerable.
This same problem is evident throughout Europe and in most parts of the industrialised world, even if the crisis in Ireland is particularly acute. Across Europe house prices and rents have raced ahead in advance of income growth and new supply has not responded quickly enough, particularly in urban areas. Pretty much everywhere the growing numbers in the middle ground are either priced out, or face sky-high rents.
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EU figures put Dublin as the seventh highest of 22 European cities in terms of rental costs in relation to average income, but at least 15 are completely unaffordable if the renter was to have enough cash left over to be able to live a normal life. Analysis by CBRE, the commercial real estate company, estimated that across Europe’s bigger cities, some 57 per cent of households who did not qualify for social housing were unable to afford monthly rents.
A report drawn up by a special housing advisory board appointed by the European Commission and chaired by former Green Party leader Eamon Ryan details a Europe-wide problem that will be very familiar to Irish readers and, as with Irish policy, sees cost rental as one of the key planks of a route forward.
Helping this middle ground is a huge political challenge – and it goes beyond housing. As well as earning too much to qualify for social housing, middle earners also do not receive many of the supports available to the less well-off – medical cards, welfare payments and so on.
Increasing entitlements is expensive, because they are such a large chunk of the population. For example, the Coalition is wrestling with how it might provide an affordable pathway to meet its promise of cutting childcare costs to €200 a month over its term in office. Improving access to healthcare is a battle. And the cost-of-living pressures facing households are going to cause constant political headaches.
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The challenge for the two big parties of Government is how to hold on to – or win back – this vital but disparate middle ground. A medium term plan for the public finances due next week will show less room in the years ahead for expansive budget giveaways. There will not be enough to buy voters off again, as happened before the general election, and we saw in October’s budget that income tax breaks can be hard to afford too.
The Coalition needs to figure out a way to persuade this group that they are being seen and heard – and their concerns addressed. Membership of the squeezed middle is in part a state of mind. But they are on average younger and their voting power is very real.
