Your key to securing supply

Ireland’s continued capacity to deliver economic and social progress hinges on many factors. A major challenge to our national recovery is our capacity to meet growing demand for housing. OECD estimates indicate that Ireland’s housing output has dropped more significantly than any other advanced economy in the last 15 years which has impacted all housing sectors; social, affordable and private residential. Affordable housing is also the area where Ireland has declined most in recent years on the global Social Progress Index – dropping from 15th place globally in 2014 to 55th place in 2017.

Housing and sustainable urban development is identified as a strategic investment priority in the recently published National Development Plan (2018 - 2027). Resolving the systematic factors underlying the current housing crisis is at the heart of the NDP with a major uplift in delivery volumes being targeted in existing built up areas of city and other urban areas (mainly brownfield sites).

Whilst commercial construction has risen swiftly in recent years, developments have been slower on the residential side. According to the Royal Institute of the Architects of Ireland (RIAI), it takes upwards of three years for new homes to come to market from the initial design stage. Estimates place required output at between 35,000 to 50,000 dwellings per year for the foreseeable future, far beyond the best case estimates for annual completion rates.

While rental costs continue to increase, the primary factor underpinning the rental crisis is a lack of housing supply. Residential development shortages are therefore both affecting rent costs and precluding many from purchasing their own homes, which is resulting in upward price pressure on rents. The rental property shortage is further compounded by an over-reliance by local authorities on private sector rentals for public housing and the growth of the short term rental market. This pressure of rising rental costs and property shortages is having a direct effect on the current homelessness crisis; between December 2014 and August 2017 there was a net increase in the number of people recorded as homeless of 5,412 people, an increase of 189%4 despite a variety of positive initiatives by government.

Government has been seeking to address supply through a range of direct interventions targeting the delivery of 50,000 additional social housing dwellings by 2021. Indirect measures have also been introduced, including new financing arrangements and planned changes to building regulations to improve density in urban areas which should improve overall housing volumes. However, the complexity of the housing development lifecycle means that a number of important inefficiencies will remain even if planned policies are fully implemented.

This paper outlines our views on how the national housing crisis could be addressed in addition to current initiatives. Our view is that there is no ‘silver bullet’ solution, however a variety of initiatives could address challenges within the sector