Housing shortage is impacting Ireland's attractiveness

Mon, 30 Jan, 2023 - 09:54

Alan Healy

The Government must urgently deliver ambitious policies to speed up the delivery of much-needed housing and introduce measures to cut the cost of new homes by €30,000.

Business group Ibec says the housing crisis has reduced Ireland’s attractiveness as a place to live and invest.

Publishing its new housing report, Ibec said a recent CEO survey shows that more than 70% of companies identified the availability of housing for staff as a challenge to their business operations in 2023, with 30% identifying it as a major challenge. More than 27% of businesses identified the impact of housing availability on employees as one of their top three external priorities for their business.

“The crisis in the availability of affordable housing in Ireland is becoming the critical barrier to the continued growth and development of business investment,” the report states.

An inadequate supply of affordable housing is the single-largest impediment to attracting and retaining talented workers, without whom business investment and expansions are not possible.

Setting out 10 steps the Government should take, Ibec said their proposed measures would also reduce the cost of a €400,000 home by €30,000.

Their proposals include a VAT refund worth 5% of a new home on a temporary basis to help offset the rising costs of construction, increase funding through the Irish Strategic Investment Fund (ISIF) and through Home Building Finance Ireland (HBFI) to ensure adequate development finance in the market, greater security for tenants, the improved tax treatment of landlords’ expenses, and an NCT-type system for rental homes.

Figures released last week show the State surpassed the target of 24,600 new homes last year, with just under 30,000 completed in the 12 months to the end of December. The figure was a 45% increase on 2021.

However, concern remains that this level of delivery is both unsustainable and inadequate.

Ibec director of lobbying and influence Fergal O'Brien said undersupply of affordable housing is 'the single largest impediment to attracting and retaining talented workers'. File picture

While an average, annual target of 33,000 homes is set under the Government’s Housing For All plan, ministers have conceded that given Ireland’s rising population, it would need closer to 40,000 each year.

The target for 2023 is 29,000, but this may prove a challenge. In recent months, there has been growing concern that the number of new homes commencing construction is slipping. Figures for last year show work began on 27,000 new homes.

“The crisis in the availability of affordable housing in Ireland is becoming the critical barrier to the continued growth and development of business investment,” Ibec’s director of lobbying and influence, Fergal O’Brien, said.

“An inadequate supply of affordable housing is the single largest impediment to attracting and retaining talented workers, without whom business investment and expansions are not possible.”

Ibec said the housing crisis has increasingly become a concern in relation to cohesion in the workplace and society more broadly.

They said younger workers, in particular, are financially pressed by ever-higher rents and the receding prospect of homeownership, which ultimately spill over into issues around well-being and productivity in the workplace. Mr O’Brien said:

From an employer perspective, there is a need to reinvigorate the policy drive around the availability and affordability of housing in the context of these challenges.

“This will require a suite of measures to improve the viability and affordability of homebuilding, such as addressing emerging financing deficits, reform of the planning and procurement system to speed delivery, a ramping-up of ambition in affordable and cost-rental housing, and significant investment in skills and modern methods of construction.”

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