Housing crisis will get worse as State becomes buyer of last resort for developers

While the increased involvement of the Government and, more specifically, the social and affordable sector in acquiring new-build apartment schemes will doubtless be welcomed by those commentators who bemoan the involvement of so-called “cuckoo funds” in the Irish housing market, could it be a case of be careful what you wish for, you might just get it?

With a new report from Hooke & MacDonald suggesting that the recent retreat of pension funds and other institutional investors from the private rented sector is leaving developers with little choice other than to proceed with a sale of new-build apartment schemes to a Government-supported buyer, some might think that it’s finally a case of housing for all. Not so, it seems.

Commenting on the potential implications of this near-wholesale shift from private sector to State investment, the report’s authors warn that the combination of rising interest rates, construction-cost inflation and a lack of incentives from Government will, in time, result in a significant slowdown in the delivery of new residential accommodation, predominantly in the Dublin region.

“While the current focus on social and affordable housing is very much required, without a balanced approach there is a risk of creating a challenging housing system, where there is a heavy burden on the State and taxpayers to provide and maintain housing into the future, especially in 20-30 years’ time, as stock ages and requires more maintenance and capital commitments,” the report states.

Beautifully laid-out detached Victorian with expansive garden in Sandymount for €4.25m

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Extended and transformed 1950s home in Castlebar for €495,000

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Should we buy a city apartment for now or a house in a commuter town for the future?

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Turnkey two-bed with attic office in East Wall for €395,000

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Quite apart from the monies required to maintain the stock it is buying now, Hooke & MacDonald asks where the State intends to source the €20 billion annually needed to pay for the 50,000-62,000 units per year the Housing Commission says will be necessary to house Ireland’s growing population.

Noting that current and future governments will be able to fund only a “limited proportion” of the annual funding which will be required “for many years to come”, the report’s authors say “it is imperative that the conditions are created for pension funds and institutional investors to make up the difference in funding requirements”.