Government housing targets are well below what is needed to close the gap between supply and demand, according to an executive at the State’s biggest estate agents has said.
Marian Finnegan, managing director of Sherry FitzGerald residential & advisory, said the Government need to almost double its target for the next few years if it hopes to meet demand for housing.
The estate agent estimates that about 62,000 new homes will be needed every year to meet growing market demand which is being driven by demographic changes. The State reported just under 32,700 completions last year.
The target for 2024 is for just under 33,500 but figures fell noticeably short of last year over the first half of the year with the Sherry FitzGerald report saying it is now unlikely that the level of completions achieved in 2023 will be surpassed this year.
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Using the latest population estimates from the Central Statistics Office (CSO), and the assumption that the average household size will fall to the EU average of 2.3 by 2036, Sherry FitzGerald estimates an annual average housing demand of 56,200 units annually. This it says is heavily weighted towards the beginning of the projection period given current shortages in the market, with approximately 62,000 units annually required over the next few years.
“As such, given the various challenges faced by the sector, it is likely that a significant supply deficit will continue to permeate the Irish residential market in the short term,” the estate agent said.
“Recent population projections from the CSO have made it clear that current housing targets are well below what is needed in order to close the gap between supply and demand,” Ms Finnegan said. “Housing output needs to be increased to 62,000 units annually over the next few years. There are significant hurdles to achieving this, however, including labour constraints, adequate infrastructure and a shortage of serviced land.”
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She expressed disappointment at measures in last week’s budget and said the Government had “missed the opportunity to address a vital element of the accommodation crisis” in the State.
Pointing to recent reports by the Central Bank of Ireland and the Department of Finance highlighting the need for substantial private investment in the sector if higher levels of completion are to be achieved, she said that without this investment, increased upward pressure will be placed on rents and prices, eroding affordability and increasing the need for more social and affordable housing.
“Institutional investors are an essential element of the market, providing much-needed rental accommodation,” Ms Finnegan said. “Therefore, it is imperative that a key goal of the next government is to attract private equity to Ireland.”
Sherry FitzGerald said the average value of second-hand homes in the State rose by 1.8 per cent in the last quarter, bringing inflation in that sector of the market to 5.7 per cent so far this year, and 6.6 per cent ahead of the same time last year. Inflation in the second-hand market stood at 3 per cent this time last year.
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