Sarah Jane Kearney
Director of new homes and development at DNG
The housing market continues to reflect patterns observed in recent years, with robust demand for new homes consistently outpacing supply. In the first five months of 2024, a total of 32,121 new homes began construction. This represents a 117 per cent increase from the 15,561 homes started during the same period in 2023.
The number of commencements for the first half of 2024 has already surpassed the total commencements for all of 2023 (32,801). From July 2023 to June 2024, 51,024 units were commenced, an 80 per cent increase from the previous 12 months. Although the construction of new homes is accelerating, aided by temporary waivers for development contributions and water connection charges, demand still exceeds supply.
Government-assisted programmes targeted at first-time buyers have played a crucial role in closing the affordability gap, making it easier for many people to buy homes and ensuring strong demand throughout the year. New homes that qualify for the Help to Buy and the First Home schemes remain highly sought after. The First Home Scheme has seen more than 4,850 approvals in its first two years, and this number is expected to grow as price ceilings for the scheme were recently increased by €25,000 across 14 counties.
DNG has called for the Help to Buy scheme to be extended for a further two years, along with an increase in the cap on the price of homes eligible for the scheme from the current €500,000 to €600,000 for the second year in a row in DNG’s 2025 budget submission.
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It is good to see many new developments that qualify for the Local Authority Affordable Purchase Scheme come to the market in 2024. To date, any release of affordable homes by a local authority has been significantly oversubscribed, indicating that more affordable homes will be required to meet this level of demand.
Mortgage interest rates have stabilised, bringing a sense of relief to the housing market. Although a substantial decrease in rates is not anticipated in the medium term, the current stabilisation is a positive development.
Population growth continues to drive robust demand for new homes in the medium to long term, with all types of housing including traditional style, own-door apartments, and duplexes in well-located areas selling well.
As the year progresses, the balance between demand, supply and affordability will be key in shaping the future of the housing market.
Ivan Gaine
Director of new homes at Sherry FitzGerald
The new-homes market is showing steady and encouraging signs of improvement. Government initiatives like the First Home Scheme and Help to Buy scheme are proving beneficial.
In addition to new tenures such as cost-rental housing, we are seeing more non-traditional house types such as apartments, duplexes and maisonettes coming to market.
Temporary measures, such as the waiver of development contributions and the Uisce Éireann connection charge rebate are helping to restore viability where it was previously challenged and have resulted in a material and significant increase in commencements. The long-awaited Planning & Development Bill is in the later stages of becoming legislation and there has been some improvement in resourcing in the planning system generally.
However, as is widely recognised, we need to plan for greater demand on our infrastructure, schools, communities and housing system. The importance of the National Planning Framework review cannot be overstated – there can be no cranes without drains and no pipeline without pipes.
This year we have valuable analysis and independent research on what is needed, with the report of the Housing Commission being particularly significant. Additionally, the joint publication by the Department of Housing and Department of Finance highlights the importance of attracting foreign direct investment into housing.
The next few months are expected to be tumultuous – few interest rate cuts, the budget on October 1st and probable differing opinions within election manifestos on further systemic reform to the housing system required.
Ray Palmer-Smith
Director of new homes at Knight Frank
Activity in the new homes market in Ireland remains robust, with the latest data from the Banking and Payments Federation and the Central Statistics Office (CSO) showing that both mortgage drawdowns and sales continue to grow, expanding by 3.4 per cent and 2.7 per cent respectively on an annual basis, recorded in June.
Activity is underpinned not just by the strength of the fundamentals, in particular economic and population growth, but also by a combination of affordability supports for first-time buyers, a greater appetite by public sector bodies as they aim to increase the stock of social housing, broader recognition of the green credentials of new homes, and rising supply levels. The prospect of further interest rate cuts later this year will add to the momentum.
According to the CSO, new home prices have grown by 7.4 per cent year on year in June with the continued shortfall in supply expected to drive price growth in the interim.
While supply has improved, with circa 35,000 units anticipated to be completed this year, new home completions remain well short of demand.
Knight Frank forecast that 61,000 units per annum are required between now and 2027 and strongly advise the Government to review not just its annual housing targets, but also the need by each age category and buyer profile.
There have been proactive steps taken this year to stimulate supply, including the extension of the Development Contribution Waiver and Water Rebate Scheme, the introduction of new guidelines on compact settlements, additional staffing resources for An Bord Pleanála and the expected passing of the Planning and Development Bill later this year. However, more needs to be done. Attention needs to focus on ensuring we have an adequate supply of land as well as the requisite funding and scale necessary to achieve these higher housebuilding targets.
Although the market is overwhelmingly dominated by first-time buyers, we are also seeing a sharp increase in prime apartment purchases from downsizers as well as buyers relocating to Ireland.
Judy Sorohan
Associate director at Hooke & MacDonald
We continue to see strong demand for new homes throughout the Greater Dublin Area. Properties within the €500,000 Help to Buy range and also those that fall within the relevant First Home Scheme thresholds are selling very well, with substantial numbers of enquiries for new launches.
Properties from €500,000-€900,000 in well-established and mature locations are also in high demand, with owner-occupiers looking to trade.
The population increase of 98,000 in the past year will put further pressure on the supply side shortages. We have seen prices increasing due to this rise in population alongside rising labour and material costs. Even if anticipated interest rate cuts continue, we will see a significant differential between income growth and price inflation.
Some purchasers who are not in a position to buy a house due to affordability are now looking to other property types to help them move away from high rental prices. As a result, one- and two-bedroom apartments as well as duplex properties are in strong demand and the limited number of these coming to the market are selling very well.
Conditions facilitating the supply of new apartments need to be improved. The Croí Cónaithe Cities Fund has the potential to be very beneficial in helping to improve the supply of new apartments to the market. This scheme aims to bridge the gap where the cost of building apartments is higher than the market sale price to owner-occupiers.
The geographical locations to which this scheme can be applied has been widened. We are seeing an increase in the number of Affordable Purchase homes coming to the market this year. This should continue to increase across different locations, which is very positive.
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We are seeing a better awareness and heightened demand from eligible applicants for these properties, and those that are coming to the market in various locations have been selling very well. The outlook for the new homes market for the year ahead is positive, but measures are needed to stimulate the delivery of a big increase in apartment construction.
A potential S48 waiver extension, continued first-time buyer schemes, along with the introduction of the new planning and development legislation later this year, should provide greater certainty to developers and confidence to build. Much of their focus will be on public bodies, given the significant funding available to the Land Development Agency, approved housing bodies and local authorities.
Through various State-backed schemes, such as Croí Cónaithe (Cities) and STAR (Secure Tenancy Affordable Rental Investment Scheme), many developments will be directed towards social and affordable homes (both on a sale and cost-rental basis). While this is very positive for the social and affordable sectors, and for the market generally, it will put further pressure on private buyers.
Frank McSharry
Director of new homes at Lisney Sotheby’s International Realty
There is a severe lack of supply in the second-hand market which is maintaining upward pressure on pricing. New homes continue to attract huge demand due to the fact they are in turnkey condition, have A Ber ratings and qualify for green mortgages and the Help to Buy and First Home schemes in some cases.
However, the Help to Buy threshold of €500,000 is inadequate in Dublin and has not kept pace with property pricing. A review would be welcome.
The ECB interest rate drop has had a positive effect on buyer sentiment. More second-hand homeowners may look to put properties on the market as a result of Irish lenders competing for mortgage business – some sizeable rate cuts.
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Supply of new homes has significantly increased, albeit still below the required level. It is crucial to maintain Government incentives to assist buyers with affordability.
Waiver of development levies are continuing to have a positive impact on new home commencements.
Elements of the Planning Bill, to be enacted soon, are welcome as they should provide more clarity to developers and reduce planning risk.
Will Coonan
Director of Coonan Property
There is a strong demand out there for new homes. We have launched a number of developments and new phases over the course of 2024 and are continuing to experience keen interest in each of the homes on offer – mostly a mixture of two-, three- and four-bedroom units.
Demand is still robust and, given the tentative stabilisation of the global economy, will remain so. The first-time buyer is still struggling in the race to get their foot on the property ladder. However, Government support for these buyers is continuing. The Help to Buy Scheme has been extended to the end of 2025 and the First Home Scheme is currently available until 2025, with hopes of extension in this year’s Budget. Both schemes help to bridge the gap between deposit, mortgage and new home prices. Nevertheless, property price ceilings and caps can still leave people out of the loop.
New home purchasers are generally buying A-rated homes and can now avail of a green mortgage with a more attractive interest rate than older homes. The Central Bank has also loosened lending rules, allowing a little more flexibility to people trying to get mortgages. This has led to a higher approval rate within the population. People are ready to go sooner than they have been in previous years.
Supply of serviced sites with planning permission is still an ongoing issue. The cost of building and financing developments will continue to have a negative effect on the supply of new homes. The waiver on levies for residential development is having a positive effect on commencements and will help meet the demand for new homes on the buyer’s side.
The turnaround to completions will take time, but it is bringing some movement to what is a sluggish system. We predict home completions to reach over 35,000 units by the end of 2024. Developers are pushing ahead with build programs where planning permissions and services allow. Nonetheless, they cannot keep up with the demand.
Sarah Murray
Director of new homes at Savills
The new homes market continues to face the challenges of greater demand than supply. This has led to continued price growth in new homes which looks set to continue throughout the remainder of the year.
Government support schemes such as the Help to Buy and First Home Scheme continue to support this cohort of the market, particularly outside Dublin where prices sit within the relevant price caps. Similarly, the Affordable Purchase scheme is also increasingly supportive of the new-home buyer.
At the other end of the market, challenges remain for the trading and trade-down buyer. Tightened supply means buyers need to be able to purchase quickly, potentially adding pressure to movers. Thankfully, a pipeline of large apartment projects into 2025 and beyond should help to ease this pressure, with the construction timing allowing such buyers ample time to prepare.
