The fall-off in new home completions in 2024 has been described as a “backwards step” by estate agent Sherry FitzGerald.
“The imbalance between the demand and supply of homes has permeated for over a decade, and a significant deficit now persists, leading to an elevated pace of house price inflation,” the company said in its latest end-of-year review and outlook report.
It called on the Government to introduce “targeted measures to boost supply” particularly in the rental sector while noting it expected the cost of second-hand homes to rise by 8-10 per cent this year as demand continues to outstrip supply and as interest rate cuts stoked further price inflation.
It also estimated that the State needed to build 62,000 new homes a year in the short term to address the ongoing shortfall in supply.
Earlier this month, stockbroker Davy said the State needs 93,000 new homes a year up to 2031 to tackle its chronic housing shortage.
[ State must build 93,000 new homes a year to meet demand, says DavyOpens in new window ]
Sherry FitzGerald’s report comes in the wake of Central Statistics Office figures last month which showed the supply of new homes fell by almost 7 per cent to just over 30,000 last year, well below Government forecasts of 40,000.
The figures have once again placed a spotlight on Government housing policy. The Coalition is said to be considering tax incentives to stimulate private-sector investment in housing.
Foreign funds had been financing major apartment builds in Dublin and elsewhere but higher interest rates and what the industry claim are stringent rent controls has choked off that investment.
“Institutional investors have played a critical role in funding and delivering much-needed rental accommodation in Ireland in recent years, particularly between 2018 and 2022, but this has been very limited over the past two years,” Sherry FitzGerald said.
The company’s report included an analysis of the affordability pressures faced by first-time buyers. It noted that the median price paid for a home by first-time buyers in 2023 was €398,488
This means that a first-time buyer couple, receiving the full Help-to-Buy tax rebate, would have needed a combined household income of €89,660. The figure exceeded the earnings of a couple, both earning the median wage of €43,200 in 2023, by about €3,200, it said.
Sherry FitzGerald also warned that landlords were continuing to exit the rental market at “an unsustainable pace” putting further pressure on rent supply. It noted that landlords accounted for 33 per cent of the company’s vendors in 2024 and just 11 per cent of their buyers were investors.
The company’s report said there were about 38,630 housing transactions made by household buyers, as per stamp duty executions, last year, a 4.2 per cent decline on the 2023 total.
The decrease was led by an 6.8 per cent drop in second-hand home sales, which totalled 31,055. This was partially offset by an 8 per cent rise in new home transactions, which totalled 7,575.
Sherry FitzGerald managing director Marian Finnegan said it was imperative that this is the year we see significant supply increases.
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