The potential for a housing crisis in Ireland is increasing. To fix this coming problem, reports by Davy stockbroker estimate that the state will need to build around 200,000 new houses over the upcoming three years. This same report determined that latent demand in the housing market is now at 106,000. Latent housing demand describes the amount of households that have a demand for homes, but these demands are not met because there is limited supply.
Additionally, the country has a predicted yearly demand of 30,000 units. In combination, about 200,000 homes will be necessary between 2021 and 2024 to solve the upcoming crisis. Last year, the state built almost 21,000 housing units and is only expected to build about that same amount this year.
Though Davy reported that the amount of homes put on the market in Ireland is aligned with UK rates on a per capita basis, there are many other factors that are perplexing the Irish market. These factors include stifled demand, multiple years of undersupply, dynamic demographics, and inward migration. The report also stated that the supply of homes is extremely lacking in comparison to the high prices of homes.
There have also been strangely expensive build costs that did not account for labor or raw material costs. The build costs of existing homes had a median at about €230,000. However, in 2020, this median number for build costs of new homes rose to €336,000. In comparison to the rest of Europe, median build costs in Dublin for both houses and apartments were consistently about 40 percent higher.
These higher build costs have been connected to causes such as demanding building guidelines and considerable charges up-front to local authorities for water, electricity, and other development contributions. These extra costs in the building process are ultimately felt by homebuyers with increased property prices.
Conall Mac Coille, chief economist at Davy, has positively stated that the housing supply may be starting to react already. There are already 10,000 apartments being built in Dublin, which will fulfill a great amount of demand for housing in the area. However, there have also been blocks witnessed and 92 percent of judicial judgements on strategic housing developments have concluded with a dismissal of the plans since 2018. A second issue area is rigid mortgage lending regulations that many consider to be inflexible compared to other countries.
As demand for new homes continues to grow, the limited supply of homes is worrisome. It is hopeful that building timeframes will accelerate and these demands will be met over the next three years. If not there may be a housing crisis underway.
Burke-Kennedy, Eoin. “State Needs to Build ‘Over 200,000 Homes’ Over Three Years to Solve Housing Crisis.” The Irish Times, 24 June 2021, https://www.irishtimes.com/business/economy/state-needs-to-build-over-200-000-homes-over-three-years-to-solve-housing-crisis-1.4601644.