Commercial Property

58,000 new homes required each year until 2027 to meet demand

Latest analysis by Knight Frank outlines sheer extent of supply deficit across six age cohorts from 20 to over 75

When one looks at the evolution of the living-sector market, Ireland is lagging behind the UK and other European markets. Photograph: Dara Mac Dónaill
When one looks at the evolution of the living-sector market, Ireland is lagging behind the UK and other European markets. Photograph: Dara Mac Dónaill
Joan Henry
Wed Mar 27 2024 - 05:45

As Ireland’s demographic profile evolves, Knight Frank Research’s latest report on the Living Sector Market offers analysis on the types of housing and living-sector supply that will be required each year, moving the debate beyond the much talked-about total housing requirement.

The report estimates that up to 58,000 housing/living-sector units will be required annually until 2027, based on Ireland’s demographic profile. The number hits 61,700 when one factors in the requirement for up to 4,000 student-bed spaces. The breakdown of this number into the six required product types and by age category now needs to be the subject of increased focus in terms of planning, attracting funding and speeding up the successful delivery of housing/living-sector options.

Joan Henry is chief economist and head of research at Knight Frank Ireland. Photograph: Tony Healy
Joan Henry is chief economist and head of research at Knight Frank Ireland. Photograph: Tony Healy

Of that total of 58,000* annually; the following are Knight Frank’s estimates of annual housing demand by living-sector category until 2027:

  • 32,000 first-time buyer family homes, ie houses or apartments that are available to buy or to rent for those aged 35-50. This number includes 8,500 units available for young renters and first-time buyers aged 25-35.
  • 9,000 homes for downsizers and mature family homes for those aged 65-75.
  • 10,000 homes to meet the current and future senior-living requirements of those aged 75 and over.
  • The remaining category of mature family homes (houses or apartments to buy or rent for those aged 50-65) will require about 6,700 units. An additional almost 4,000 student beds will be required to cater for students aged 20-25.

Much has been and continues to be said about the extent of the housing supply issue in the Irish market. While there were 32,695 housing units completed in 2023, a 10 per cent increase on 2022, the total remains considerably behind the amount of housing units required annually to meet current and future demand.

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What is becoming more evident is the need for housing policy in Ireland to allow for the delivery of housing by product type, to meet the requirements of each age category and the buyer profile that typically matches each age. Increasingly important at this point is the number of units required by type across the various living-sector categories.

There are numerous pressure points evident when looking at the age profile of the population. Projecting forward to 2027, one can identify the clear bulges in the number of people who will fall into the 20-25, 25-30, 50-55 and 75-and-over age brackets, and the commensurate lack of age-appropriate housing stock coming on stream to accommodate them.

Add to this mix, the growing importance of sustainability or environmental, social and governance (ESG) considerations in the delivery of housing, and the need in particular for energy efficiency along with buyer/renter preferences for amenities and services, then it’s clear that the need for innovation in the area of housing choice for all ages has never been more acute.

When one looks at the evolution of the living-sector market, Ireland is lagging behind the UK and other European markets. Investment in the UK market is far more diverse, with, for example, about 33 per cent of total-living sector investment spend in 2023 going into student accommodation, 28 per cent into multi-family, 20 per cent into single-family and 18 per cent into senior living. Knight Frank Europe’s Investor Survey 2023-2024 found that London was the top destination for capital across all the key living-sector categories. Dublin ranked third for build-to-rent and private rented sector and eighth across all categories, despite both the lack of product available in the Irish market and the narrow range of product type. Investment in living-sector product in Ireland in 2023 was spread across just three categories, with 86 per cent in multi-family, 12 per cent in single-family and only 2 per cent on student accommodation.

Knight Frank Europe’s Investor Survey also found that 78 per cent of investors (with €67 billion assets under management) intended to increase their exposure to the living sectors over the next five years.

Given the housing deficit and the projected demand for housing over the coming years, Ireland is well positioned to attract a proportion of this international capital, which would assist with the much-needed evolution, diversification and delivery of housing/living sector product.

* All numbers are rounded

Joan Henry, chief economist & director of research at Knight Frank Ireland

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