IRELAND needs to build over 30,000 new homes per year to meet the needs of our growing population, a leading economist told a national housing conference in Dublin yesterday.
Marian Finnegan, who is with the property company Sherry Fitzgerald, broke down the demands for new homes as follows: 26,000 per annum during the period 2012 to 2016; 34,000 per annum between 2017 and 2021 and 31,000 per annum between 2022 and 2026.
John O’Connor, the chief executive of the state-run Housing Agency, warned that if we repeat the cycle of extremely low housing output and do not match output to population growth it will lead to a “pent-up demand” in years to come.
The conference heard that the population had risen to 4.58 million and is expected to increase to 5.1 million by 2026, and based on this we were expected to need an average of 30,200 new homes every year over the next 15 years.
Mr O’Connor said Ireland must face up to a reality that we were in crisis and hard decisions still need to be made, starting with the area of property valuation.
“Waiting for a market floor is just as useless as the comfort we were taking a few years back in thinking we were gong to have a soft landing,” he said.
“We must stop waiting for this mythical market floor and face reality. An asset is worth what someone is willing to pay for it and what its value is to the end user. The current method of valuation of property are not appropriate for the current situation and we should base value on end user value such as rental return.”
He suggested a number of alternative ways to determine house prices, such as using a multiple of income.
Four times income was probably an appropriate maximum, as during the boom this rose to eight times income.
The rental model was another way of calculating price, whereby price should be 12 times the annual rental income.
Paul Keogh, the president of the Royal Institute of Architects of Ireland, said there was a perception there were plenty of unoccupied housing units to meet the demand for new homes. But, he said, that was not actually the case.
It was projected we would build about 10,000 units next year — most of which were one-off houses in the countryside.
But the need for new homes was almost three times that and was concentrated in the greater Dublin area, where supply was expected to become quite limited from next year. So we need to start planning now, he warned.
© Irish Examiner Ltd. All rights reserved