There was much valuable insight if little cheer in a report on the Irish housing market published on Wednesday by Davy.
Written by Conall MacCoille and David McNamara, Ireland's housing demand/supply imbalance updated population and housing demand forecasts using the latest data from Census 2016 in a bit to make sense of the current housing crisis.
The authors concluded that as many as 50,000 new units might need to be built each year out to 2021 to satisfy demand. The minimum number needed would be 35,000.
This was based on Census 2016 showing that the population grew 2 per cent more than previously though, and other demographic trends. Previously economists and housing experts had put the figure at between 25,000 and 30,000.
“Moreover, these estimates may not fully account for ‘pent-up’ demand,” Davy said. “For example, Census 2016 revealed a sharp rise in the proportion of working adults living at home with their parents – or 40,000 people. Similarly, there was an exceptionally sharp fall in the home ownership rate among 20- to 35-year-olds over the past five years, indicative of weak housing supply holding back household formation.”
And while construction activity is unquestionably on the increase, Davy believes that the true number of new builds last year was probably around 7,500, rather than the official figure of 14,900 (the weakest since the 1970s).
Davy also believes that the double-digit house price rises are likely to “persist for longer”.
The stockbroker is “sceptical” about the high level of vacant housing stock helping to resolve the crisis, and said the number of ghost estate units that could be brought into circulation amounts to just 6,108.
It also believes there is sufficient land available with planning for new housing, and that while financial constraints on the construction industry are a concern they are diminishing.
All in all, plenty for Minister for Finance Paschal Donohoe and the Minister for Housing Eoghan Murphy to ponder as they seek to frame a policy response in Budget 2018 on October 10th.
