The Republic needs 93,000 new homes a year up to 2031 to tackle its chronic housing shortage, analysts say.
Dublin stockbrokers Davy calculate that demand for new homes has hit 230,000 following a “disappointing” 2024 for residential building.
Analysts at the firm estimate that the Republic will need 93,000 new dwellings a year up to 2031, when they predict the population will hit six million.
“Ireland’s housing crisis has arrived at a critical juncture,” warns the firm’s report, Reforms Needed for Housing Delivery. “With each passing year and the fundamental problems remaining unresolved, both pent-up demand for housing and the scale of the challenge have grown larger,” it states.
Authors Kevin Timoney, the firm’s chief economist, with analysts Colin Sheridan, Diarmaid Sheridan and Thomas Ryan, urge the new Government to axe rent caps, cut building costs and streamline planning.
“The situation is unique internationally, owing to a major lack of supply, and we believe that resolving this demands its place at the very top of the new Irish Government’s list of priorities,” the four say.
They forecast that the cost of solving the crisis could hit €40 billion by 2031, more than three times the €13 billion spent last year.
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The report highlights the potential for Davy clients - housebuilders Cairn Homes and Glenveagh Properties, and banks AIB, Bank of Ireland and Permanent TSB - to profit from the crisis.
Tackling “weak construction productivity” would increase the number of homes built.
“We note that this opportunity provides the two listed home-builders, the three domestic banks and the Irish economy in general with much headroom to grow,” says Davy.
The firm adds that the builders could provide social housing while the banks could boost mortgage lending.
Davy published the report on Wednesday as the Government came under fire for missed housing targets when the Dáil reconvened for its new term.
During the election campaign, senior ministers predicted that up to 40,000 new homes would be built in the Republic last year. However, the total was actually 30,300, sparking criticism of Government performance in an area the mostly re-elected Coalition members pledge will be a priority.
Davy’s analysts describe the final outcome for 2024 as disappointing, saying they predicted a year ago that 34,000 new houses and apartments would be built in the Republic in 2024.
In common with most other observers, they believe there will be a sharp increase in building in 2025 and 2026 as Government incentives boosted the number of homes on which builders began work last year.
Temporary waivers on water connections and levies paid to local councils could increase new home completions to 42,000 this year and 50,000 in 2026. However, those waivers, worth 5 per cent of building costs, ended on December 31st, and new houses or apartments must be finished by 2026 to qualify.
By the end of last year, the Republic had 230,000 fewer homes than it needed, according to Davy. This shortage was spread around the State. Dublin and Munster needed 60,000 dwellings each. Leinster excluding Dublin was 70,000 down, while the shortage in Connacht was 24,000.
Plugging those gaps would simply restore the number of homes relative to the population to what it was between 2007 and 2023, which the broker’s analysts say was still low in European terms.
The crisis has particularly hit younger people, with those aged 21 to 39 less likely to own homes of their own than their counterparts in Europe, the report states.
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