House completions seen falling short of Housing for All targets
To Meeting Incentives Housing Supply, To Government Challenges Despite And Gathering Momentum' Targets 'are Ey Subsidies Providing Said Boost The
The number of houses built over the next three years will fall short of Government's plans under its Housing for All programme, as delays and escalating inflation weigh on some schemes, while the war in Ukraine has increased demand for homes, new forecasts reveal.
The key projections are from EY Economic Advisory and were prepared for Euroconstruct, which draws up forecasts across the continent.
There will be 25,000 homes built this year, 27,000 in 2023, and 32,000 units completed in 2024, according to the EY study, marking some sort of return to the growth in house building since the disruptions caused by the Covid-19 crisis.
However, the completions will still fall short of the numbers the Government has set out in its own plans, EY said. The challenges to meeting the targets "are gathering momentum" despite the Government providing incentives and subsidies to boost supply, while the war in Ukraine has caused additional demand for housing from refugees fleeing the conflict, EY said.
"These projections are below the Housing for All targets of 29,000 and 33,450, respectively, and reflect a combination of factors, including delays with respect to planning, the servicing of lands, the longer delivery time due to an increase in the number of apartments, as well as the escalation in building costs, which is impacting the viability of some schemes," the study found.
Irish construction inflation will surge to 10% this year and run at 6% in 2023, according to the forecasts.
Director Annette Hughes at EY Advisory pointed to "challenging" conditions in some parts of the construction industry.
"Although recent data show a substantial increase in the number of units granted planning permission — almost 43,000 in 2021 of which 60% were for apartments — there are constraints on the supply side in converting these permissions to completed units, such as a lack of services and other infrastructure to enable development," she said.
Economists in the past have said Ireland will need to build around 35,000 new homes each year over multiple years to start to close the gap between supply and the huge demand for housing caused by an expanding economy and a growing and more wealthy population.
However, the Covid crisis further delayed any ramp-up in housing completions. Amid the housing crisis, CSO figures show that rental costs have climbed 11% in the past year and the cost of houses has soared 15%. New figures for house prices are published later this week.
Ms Hughes also pointed to the issue of the huge rise in construction costs this year to deliver "some of the infrastructure projects in the NDP [National Development Plan], as capital budgets for the year are already determined".
Overall, EY forecasts that output will grow across all parts of the Irish construction industry, up almost 5% this year to over €29bn. It sees further growth in 2023, of just over 4%.
forecasts are a "cautiously optimistic" outlook for construction, and the challenges in ramping up housing output can be overcome, EY said.
"The size of the housing challenge cannot be overlooked but Ireland does have the potential to tackle the supply issue," Ms Hughes said.
"A number of public and private affordable housing schemes are to be introduced to address affordability while one of the four pillars in the Housing for All plan is focused on increasing supply, including a number of schemes designed to activate zoned lands and existing planning permissions, which will be essential in addressing the issue head on.
"There are also a number of subsidies and grants designed to unlock the potential in the market. This multi-pronged approach should be welcomed and with ongoing input from both industry and Government, it will hopefully make it possible to expedite delivery and deliver much needed supply,” the EY Advisory director said.