There are some encouraging indicators of increased supply coming on stream in the housing market. But it will be a long road back to any kind of normality in the rental market while, for potential house buyers, supply remains well below demand.
In the rental market, the exit of private landlords continues apace, with many selling up, thus leading to the eviction of tenants. Sinn Féin TD Eoin Ó Broin estimates that on average 80 private landlords exited the market each week in the last three months of 2021. High purchase prices are one reason why many are selling their property. Nonetheless the strong returns available to those who continue to rent out homes suggests that other factors are also at play. Landlords blame the regulatory and tax systems.
There is a strong pipeline, when properties started in 2019 and 2020 and not yet completed, are added in
More rental supply is expected to come on stream due to Government initiatives, notably in the area of cost rental – along with high end properties funded by international investors. But there remains a gap in the market as small-scale landlords leave and policy seems pulled between increasing affordable rental capacity and homes for purchase.
In terms of housing supply, a report from the Banking Payments Federation of Ireland (BPFI) points out that completion levels had a disappointing fall-off in the fourth quarter of last year, presumably as a knock-on from Covid shutdowns. However, the 30,700 housing starts last year were a 42 per cent increase on 2020, showing that the sector is responding. There is a strong pipeline, when properties started in 2019 and 2020 and not yet completed, are added in.
However, the BPFI cautions that capacity in the construction sector remains an issue. This arises from two factors. One is the higher than usual level of absenteeism on building sites, due presumably to Covid-19. The second is the general labour shortage. The threatened hit to the economy from soaring energy prices may yet feed through to housing as well. In this context a key task for Government is to keep building volumes up, no matter what.