Over 200,000 housing units will need to be built in Ireland over the next three years, according to a new report from Davy.
Its chief economist Conall MacCoille has estimated that based on the population growing by 240,000 over the past five years there is a “latent” demand for housing for which supply has not caught up.
This figure was 106,000 in 2020.
In addition, there is an annual demand for 30,000 new units a year and then there are the houses which become obsolete and need to be rebuilt.
That means an annual average for the next three years of over 66,600 units. Estimates for completions this year vary between 18-20,000 units.
The report also notes that completions last year (20,700) were slightly higher as a percentage of existing housing stock and population than completion levels in England.
The report makes the case that potential buyers here are credit constrained by “conservative” borrowing rules in comparison to UK and European standards.
It notes that the Central Bank maintains that prices would be 25% higher here were not for the mortgage lending rules.
The report says urgent action is needed to mitigate the cost of new builds which are now well above second hand homes, which was not the case in 1990’s or 2000’s.
The median price of a new build in 2020 was €336,000 compared to the median price of €230,000 for an existing house.
The Irish Home Builders Association expressed concern that the supply of new homes is still well behind where it needs to be.
“The Covid-19 pandemic and complications associated with Brexit has led to serious challenges for the home building sector, including the rising costs of materials, which is negatively impacting on the delivery of much needed homes,” said spokesperson, James Benson.
“Many middle-income earners continue to find themselves locked out of the market. We need to ensure we are building the types of homes that people and families need.”
“We can do this through positive targeted reform of planning, ensuring enough zoned lands are provided and investment in critical infrastructure which will remove many of the current blockages which are restricting supply.’’