Industry may never build 30,000 new homes

The building industry will likely “struggle” to build 20,000 homes this year and may never deliver the 30,000-plus new homes that experts predict are needed to fully meet demand, one of the country’s largest house builders has said.

However, Glenveagh Properties said that despite the supply constraints, it nonetheless expects house prices to settle closer to the rate of annual wage growth because it believes the Central Bank’s rules, which ration the amount of mortgages lending, will do their job by dampening house price inflation.

Stock market-listed Glenveagh built 275 of the 18,000 new homes completed in the Republic last year and said it is well down the road to meeting its target of 725 new homes this year.

It is one of only two housebuilders listed on the Irish Stock Exchange and despite its focus on the greater Dublin region, the firm is also looking at Cork, Limerick, and Galway.

Chief operating officer Stephen Garvey told reporters the industry will take many years and may never get to the target of 30,000 to 35,000 new annual homes that is widely required by the industry to meet demand.

There were 18,000 new homes built last year, according to official figures.

Citing the experience in the UK which never reached its widely touted target for 300,000 annual new units, Mr Garvey said he doubted whether the interim target in Ireland for 20,000 new units to be built by the industry this year will be met.

I certainly think that 20,000 units is going to be a push across the industry. I just don’t see it coming into the system,” Mr Garvey said at the company’s 2018 earnings presentation.

Glenveagh, which listed for the first time on the Irish exchange in late 2017, posted a net loss of €3.5m for 2018.Revenues of €84m included €5m in land sales. Mr Garvey said many commentators pointed to the large number of homes that were in the planning process but warned that it can take up to 10 years for house sites to be fully built out and delivered.

“You can put 10,000 units into planning today but it doesn’t necessarily [mean] it turns into housing,” said Mr Garvey.

“It doesn’t necessarily mean the boots are on the ground and the shovels are turning it into product.”

Glenveagh’s average sale last year was €287,000. Chief executive Justin Bickle said that at prices of between €220,00 and €350,000, it did not see any constraints arising from affordability.

There was no evidence of any slowdown in demand at the “starter homes” part of the market in which Glenveagh is focused, he said. It announced two deals to acquire sites of 793 homes in Leixlip and Newbridge in Co Kildare.

After the deals, it said it has €90m left of the money it raised over a year ago for site acquisitions and deals.

It is working on deals to acquire three sites in the Dublin region of 730 units, which will cost €26m.

Some of the money will be earmarked for further deals in Cork and aims to be producing from as many as 10 sites across the region in future years, said Mr Garvey.

Cork “is a great opportunity for us” and is a market which could contribute as many as 400 to 500 new units a year in the coming years, he said.

Glenveagh shares closed 1.5% higher but have lost 23% in the past year.

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