The housing crisis is unlikely to improve in the short term, according to experts on the subject, but a clear direction in terms of policy and delivery over the next decade would go “a long way” towards solving it.
There is a consensus that State housing targets have been lower than needed for population growth. Demand continues to outstrip supply in the market, with prices continuing to rise for people seeking to buy and rent.
Against an overall target of 33,450 for last year, the Central Statistics Office (CSO) reported that 21,634 new homes had been delivered by the end of September, down from 22,325 in the same period a year earlier. The final figure is likely to fall far short of the 40,000 delivered units predicted by Taoiseach Simon Harris and Minister for Housing Darragh O’Brien.
Almost 55,000 new home commencement notices were received in the 11 months to the end of last November, which Dermot O’Leary, chief economist at Goodbody Stockbrokers, regards as representing “improvement in the pipeline”.
My driving instructor texted me: ‘Things aren’t working out. I’ll transfer you back your money’
Spain proposes 100% tax on homes bought by non-EU residents
Aoife was diagnosed with HIV in Australia in 2020: ‘He was unknowingly positive. We had no idea’
Caroline Darian, daughter of Gisèle Pelicot: ‘It’s difficult to be the daughter of a sexual criminal and the daughter of an icon like my mum’
However, he says there is some uncertainty as to what proportion of those will ultimately be built, with spikes in activity towards the end of the year likely associated with the Government’s extension of the development levy waiver and water connection charge rebate.
“In a way, builders had a free option to put a commencement notice in to ensure that if they were to build them out by the end of 2026, they would be able to avail of those incentives,” O’Leary said. “It’s uncertain how many of those commencements were just simply builders taking that option versus builders who fully intend to build out those units.”
O’Leary, who was a member of the Housing Commission, which examined issues such as tenure, standards and sustainability in the provision of housing for the Government, described official targets to provide 50,500 homes per year up to 2030 as being on the “conservative side”. He believes the figure should have been at least 55,000 per year.
“If you want to address the housing deficit sooner, I would have preferred a more aggressive set of targets,” he says.
Based on the 2022 Census, the commission estimated the housing deficit to be between 212,500 and 256,000 homes.
However, this is in addition to an ongoing need for between 35,000 and 53,000 homes per year, as flagged by the Economic and Social Research Institute (ESRI).
“Even getting to 55,000 over the next five years on average still wouldn’t eat very much into that estimated housing deficit,” says O’Leary.
“You do need to take that longer-term view on housing, and that’s a very difficult thing for people who are stuck in expensive rental accommodation to hear, but there’s very few short-term fixes for this. It’s hard to call it over 10 years, but if you have stability and clear direction in policy for 10 years, I think we’ll go a long way in actually solving it.”
Further evidence of the pressures in the housing market was contained in recently published research from property listings company Daft.ie, which showed house prices increased by 9 per cent last year. It showed that the supply of second-hand homes was at the lowest level since 2007, standing at fewer than 10,500, a 15 per cent year-on-year drop.
The typical listed price across the State in the final three months of last year was about €332,000 – some 30 per cent higher than at the onset of the Covid-19 pandemic, according to the research.
A “very significant increase” in supply is needed to normalise house prices over time, O’Leary says, “or obviously, a very significant economic contraction would probably do that as well”.
Last month the ESRI warned that Irish house prices are overvalued by up to 10 per cent, prompting concerns there could be “a painful correction” similar to that which followed the 2008 financial crisis.
Although State support for prospective home buyers and renters is expanding, this “won’t make housing any cheaper,” says Lorcan Sirr, a senior lecturer in housing at Technological University Dublin.
Among the supports is the Help to Buy (HTB) scheme, which assists first-time buyers to build or purchase newly built homes through tax rebates of up to €30,000.
Despite the Parliamentary Budget Office (PBO) warning that extending the measure, which has approved more than 51,000 claims since its introduction, may drive up property prices, it has been extended until the end of 2029, at a full-year cost of €185 million.
In its general election manifesto, Fine Gael pledged to increase the sum available through the scheme to €40,000.
For renters, meanwhile, the Rent Tax Credit has been increased by €250 to €1,000, though rent inflation continues to accelerate.
Before the general election, Fine Gael pledged to increase the credit by a further €500, while Fianna Fáil said it would double the payment to €2,000.
Across the State, the average open-market rent was €1,955 per month in the third quarter of last year, 43 per cent higher than before the pandemic, according to the latest quarterly report from Daft.
Open-market rents in Dublin rose at an annual rate of 5.2 per cent to an average of €2,476 per month.
The number of homes available to those relying on the Housing Assistance Payment (Hap), meanwhile, is down, according to a recent Simon Community review, which showed that in 12 of the 16 areas tracked, there were no properties available to rent within standard or discretionary Hap limits.
As the rental sector becomes more unaffordable, an increase in homelessness this year is regarded as a possibility.
“I can’t see homelessness going down,” says Sirr, citing eviction from the private rented sector as one of the leading causes of homelessness and a rise in the cost of renting.
He fears the Government’s target of 41,000 homes for this year “won’t be met” because of a lack of water infrastructure.
“The new housing targets seem to have been made in a vacuum ... What we might see now in the next year is an increasing number of planning permissions being refused because of a lack of water infrastructure,” he adds.
Housing targets agreed in November would see 41,000 homes completed this year, rising to 43,000 in 2026, 48,000 in 2027, 53,000 in 2028, 58,000 in 2029 and 60,000 in 2030.
State water utility Uisce Éireann can only supply 35,000 new homes a year for the next five years, saying last month that additional funding of €1.7 billion would be needed to fulfil the Government’s targets.
The most significant development last year, Sirr says, was the passing of the Planning and Development Act, a reform of the planning system aimed at addressing the housing crisis and wider infrastructural deficits in areas such as transport, water and energy.
At the heart of the act is a proposed reorganisation of An Bord Pleanála, which becomes An Coimisiún Pleanála. Statutory timelines for decision-making have been introduced and restrictions added on who can seek judicial review of its rulings.
“It’s designed to speed up delivery of housing but in my opinion it will slow it down because there are aspects to it that are highly likely to be challenged in court,” says Sirr.
The number of new homes coming to the market for purchase is unlikely to increase this year, he says.
“Out of all the houses built this year, a lot of them are social housing or built to rent ... Since 2017 we’ve seen a decreasing proportion of new houses coming to the local estate agent’s window for sale. I think we’ll see a continuation of that trend in 2025,” he says.
However, increased social housing output has “knock-on benefits” for the general housing market, says Michelle Norris, professor of social policy at University College Dublin (UCD) and former member of the Housing Commission.
Namely, it frees up a significant portion of properties in the rental market currently rented by tenants in receipt of Hap, a figure put at more than 56,800 at the end of 2023.
While Hap is a “vital” short-term solution for those in need, such as those who become unemployed, “it’s not a great solution” for those with long-term housing needs, she says.
“You’ll always need something like Hap, the issue is the level of reliance on it and the knock-on problems it causes in the system.
“No landlord will charge less than the Hap level of rent, and the problem is if you increase Hap, you increase the level of rent for the rest of the market.
“Providing social housing for Hap claimants is a better solution and has knock-on benefits for people who aren’t on Hap, who aren’t on social housing lists.”
The commission recommended a targeted increase in the proportion of social and cost-rental housing to 20 per cent of the national stock, more than twice the existing 9 per cent. Describing it as a “radical recommendation,” Norris said such a move could take more than 20 years to achieve.
Based on her calculations, she says around 20 per cent of the national housing stock was originally built as social housing, before half was sold off at not only a discounted cost but also at a “social cost”.
[ I am not sure Ireland has a housing crisis. The problem is a century oldOpens in new window ]
“It means that one generation invests money in social housing, it’s sold off and then the next generation needs to invest again,” Norris says.
“If we had retained ownership, we would have the same level of social housing as Denmark, France and Austria, the countries with the highest level of social housing in the world. We would have the level of social housing that the Housing Commission said is necessary.”
This is alongside a historic “boom and bust” trend of funding, with cuts during recessions resulting in long-term waiting lists.
“We’re constantly running to catch up,” she says
- Sign up for push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Listen to our Inside Politics podcast for the best political chat and analysis
