Demand for all types of new homes at 47,000 a year 'needs Government rental focus'

Population growth and net migration alone require 30,000 new homes to be built each year, while falling household size and obsolescence of existing housing stock brings the total demand for new units to 47,000, according to a new report. Picture: File picture/Pexels

Demand for all types of new housing is running at 47,000 a year and can be met by the Government funding initiatives for the private rental and social rental parts of the housing market. 

The report by Ronan Lyons of Identity Consulting, who is also assistant economics professor at TCD, was commissioned by industry group Irish Institutional Property. 

The group includes many of the Irish stock market listed homebuilders and property firms, as well as international property firms, including Kennedy Wilson and investor Bain Capital.

The estimate that annual underlying demand is running at 47,000 new homes through 2025 compares with other estimates that  35,000 new housing units are required over many years, and includes demand for rental and social homes.

Population growth and net migration alone require 30,000 new homes to be built each year, while falling household size and obsolescence of existing housing stock brings the total demand for new units to 47,000, according to the report.

“Action must be taken to increase housing output in a short a timeframe as possible,” Mr Lyons said, even as that only supply of owner-occupied housing appears to be meeting demand in recent years.  

Ronan Lyons of DAFT

“The other sectors, however, still look chronically under-supplied” and providing private rental and social rental homes “will be central modes of tenure in meeting Ireland’s substantial housing needs over coming decades”, the report says.

Under a cost-rental scheme, Mr Lyons favours the Government sharing the housing costs for low-income households. Nonetheless, he says the Government setting controls on rents for new homes will make the supply of rental housing even scarcer.

And under shared-equity loans, he says, “thousands of aspiring homeowners, currently shut out of the housing market” will be able to afford to buy.

“The overwhelming evidence from both sale and rental markets in Dublin is that availability is the key determinant of subsequent price changes,” according to the report.

The demand will be acute over the next few years for smaller homes such as apartments in cities. However, the costs of building an apartment in Dublin can average as much as €460,000, the report says.