ESRI: Housing crisis will continue for years

The housing crisis is set to go on for years because not enough homes will be built, a leading think-tank warned yesterday.
ESRI: Housing crisis will continue for years

The Economic and Social Research Institute (ESRI) said 25,000 houses will have to be built every year to meet growing levels of demand, but the country is nowhere near those levels.

The total of new builds for this year is expected to be around 12,000 and the ESRI has suggested the necessary target won’t be met for at least another three years.

The forecast coincided with figures from the Department of the Environment, showing that there are now more than 5,101 people living in emergency accommodation, including 774 families with 1,638 children. The figures mean since last January there has been a 93% increase in family homelessness and a 16% increase in adult homelessness.

Simon Communities spokeswoman Niamh Randall said the figures were “unacceptable” and said those stuck in emergency accommodation, such as hotels, B&Bs, and dormitory-style units, were experiencing trauma which needed to be properly addressed by the Government.

The news on the further rise in homelessness came as Dublin City Council confirmed that 22 families who had hoped to move into modular homes by Christmas will not now be able to. Work had been continuing on the modular units at the Poppintree site in Ballymun, but days were lost in recent weeks due to a dispute over the land involving members of a housing organisation.

That was resolved, but while the local authority had indicated it was still aiming to have construction finished by Christmas so the families could move in, it confirmed last night that this would not be the case.

Modular homes are to be built in a number of other sites in Dublin next year.

The Simon Communities of Ireland and Threshold published annual reports for 2014 yesterday and warned the situation had worsened in 2015 and that the Government needed to take firmer action to get a grip on the housing issue. Both said there should be an increase in rent supplement levels now that rent stability measures have been brought in, and both also called for a national strategy on the private rental sector.

The ESRI also said that government policy reform could aid new housing development and suggested the introduction of a land tax t

hat would increase in line with house/land prices — as currently exists in Denmark and other countries — could be looked at in greater detail in an Irish context, as it has proved to be an incentive to sell/use underdeveloped or vacant land in periods of increased demand.

It also noted that the Government’s targets for social housing, up to 2018, are unlikely to be met.

“One possible way of achieving a significant increase in social housing provision is for the State to provide this through local authority schemes as it used to prior to 2009,” it said.

The ESRI sees the economic contribution from the construction sector increasing next year, but warned housing supply will continue to “undershoot demand” and remain “the crucial issue”.

“While the pace of economic growth has increased, we identify issues in the housing market and a potential significant downturn in global trade in 2016 as downside risks to our forecasts,” the ESRI’s David Duffy said.

Overall, the ESRI is forecasting economic growth for GDP of 6.7% this year, to be followed by 4.8% growth in 2016. The official unemployement rate should stand at 9.3% at the end of this year, it said, but could fall to 7.5% by the fourth quarter of 2016.

“While the national accounts have experienced a significant degree of volatility in 2015, with trends in patents and aircraft leasing having a particular impact, it is important to acknowledge the economy has experienced real and significant growth in 2015,” said the ESRI’s Kieran McQuinn.

Consumer spending is expected to keep growing, while exports should grow by over 13% this year before slowing to 7.6% next year.

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