Ministers hail sea-change in housing supply

If you didn’t know we were on an election footing, having Taoiseach Leo Varadkar, Minister for Housing Darragh O’Brien and Minister for Environment Eamon Ryan presiding over a routine housing announcement might have alerted you to the fact.

The three of them were in Government Buildings yesterday to launch the latest Housing for All update, which was centred around an already published data point, new home completions for the first three quarters of the year (22,400) and a few relatively minor policy tinkerings.

Housing has had the Coalition on the back foot since day one. Making progress on the issue is seen as make or break for the Government as it attempts to repel Sinn Féin and hold on to power.

The good news for ministers is that based on current trends, new home completions are expected to exceed this year’s target of 29,000 units (the expectation is for about 31,000 but they could go as high as 34,000, according to one estimate). The Government is also hoping next year’s target of 33,400 will also be exceeded.

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Ministers hailed the latest numbers as evidence of a sea-change in the provision of housing and a potential inflection point in the crisis. “It’s clear we are making real progress,” Varadkar said, noting that 30,000 units had been delivered in the past 12 months, 50 per cent more than what was coming on an annual basis when his Government came to office.

O’Brien said that “all the indicators – completions, commencements and planning permissions – are showing a positive momentum and strong delivery.”

Ireland is one of the few countries in Europe to be expanding its housing output. Higher interest rates and rising construction costs have triggered construction downturns in most other European countries despite the ongoing need for more housing.

There is, however, “a swollen stock of dwellings currently on-site and under construction” here, according to John McCartney, director of research at BNP Paribas Real Estate.

This is most evident in the Dublin Housing Supply Co-ordination Task Force data which indicates that approximately 18,400 units were under way in the capital alone at the end of quarter three.

There are two reasons for this. The units that were delayed by Covid restrictions in 2020, 2021 and 2022 are now coming to completion in addition to units that have been started since Covid.

The other reason, according to McCartney, is that in urban areas there has been a shift in the mix from houses (which take less time to build) to apartments (which take longer), resulting in more units being on-site at present.

“There are some signs that this is reversing again but, as of Q1 this year, apartments accounted for 86.6 per cent of the units on-site,” he says.

Either way, there is a significant uptick in housing supply which ministers are keen to make political capital out of. Sinn Féin has, however, claimed that the Government will miss its social and affordable targets.

The Housing for All strategy promises 9,100 social homes and 3,500 affordable homes this year. The latest figures only cover the first two quarters, making end-of-year tallies hard to predict at this stage. Last year, just over 7,000 social homes were delivered against a target of 9,100.

Part of the problem relates to Government spending, which is behind target again this year. The Government earmarked €4 billion for spending on social and affordable housing this year but capital spending on housing – up to the end of September – was just €1.9 billion. The State-backed Land Development Agency (LDA) is said to be spending only a fraction of its budget for various technical reasons.

We’ll have a clearer picture of all these trends at the end of the year but Coalition ministers are convinced they’re turning the dial. The Economic and Social Research Institute is working on a piece of research for the Department of Housing to estimate housing demand in the Republic out to 2040. It’s expected this will lead to revised Housing for All targets.