The Covid-19 economic shockwaves will mean house builds will fall far short of what is required this year and next, storing up more problems for prices and rents in an already dysfunctional property market, the Economic and Social Research Institute (ESRI) has warned.
The think-tank has, for the first time, put numbers on the huge dampening effects on house building and house prices, even as building sites start to reopen this week following two months of lockdown.
Under a scenario whereby the economy recovers quickly from the Covid-19 shock, ESRI economists Matthew Allen-Coghlan and Kieran McQuinn forecast 18,000 houses will be built this year and 28,500 next year.
Under its “sluggish” scenario, only 15,000 new houses are built this year and 20,000 in 2021.
The figures compare with the 21,000 houses built last year and fall far short of the 35,000 annual house builds the ESRI and other economists have long said are required to come anywhere meeting demand. Under its V-shaped recovery scenario, house prices, by the first quarter in 2021, are unchanged from a year earlier, but have slumped 12%, under a “sluggish” scenario.
Prof McQuinn said: “Arguably, the greatest impact of Covid-19 on the Irish housing market over the longer-term may well be on the supply side of the market.”
Meanwhile, a breakthrough agreement between Germany and France will help reboot Europe’s Covid-19 devastated economy and fewer Irish people will lose their jobs, experts have said.
The Merkel-Macron agreement paves the way for the European Commission to detail next week how a €500bn package of new money will be deployed to help European businesses and households.
Fergal O’Brien, director of policy at Ibec, said the package will “eventually reach main street” here.
Ben Tonra, professor of international relations at UCD, said it was “a sweet, sweet” agreement.