Housing supply is unlikely to meet demand "until at least the end of 2023", a new analysis of the property market has revealed.
The data, issued this morning by the Banking and Payments Federation Ireland (BPFI), the business group for lenders, warns that the impact of Covid-19 on housing supply is significant and will have an impact for years to come, undermining supply and causing further stress for the mortgage market.
The disruption caused by the construction shutdown early this year and the impact of Covid-19 on the wider economy mean that supply will not catch up with demand for several years. Only 20,000 new homes will be completed this year, short of the 35,000 annual units that are required, BPFI chief economist Ali Ugur said.
Taoiseach Micheál Martin estimated that completions figure will be even lower, at 18,000.
“With a decline in both completions and commencements of new builds this year due to the current pandemic, the supply of housing stock in the year ahead will now fall well short of expected current and pent up demand,” Mr Ugur said.
This comes amid “the significant rebound in both mortgage drawdowns as well as mortgage approvals”.
Mr Martin, speaking yesterday at the launch of an affordable housing scheme in Carrigaline, Co Cork, said the impact of Covid-19 on housing production has been severe.
"We have allocated substantial funding; the issue is capacity, and capacity to deliver. That is why we kept construction open during level 5 and the second wave of the pandemic, because we have to get output up," he said.
"During 2020, construction output took a hit because of Covid and because of the first lockdown. It is going to be very difficult to get to 18,000 units completed in 2020, that is not enough.
"We are targeting 25,000 units next year, with additional emphasis and focus on affordable housing. We will not be happy until we get to approximately 33,000 per annum, because that is what the Economic and Social Research Institute (ESRI) is saying in its research that we should be at, in terms of meeting social and affordable housing. We need to do much more."
A separate report, also issued this morning, shines a light on the likely impact of Covid-19 on potential buyers.
The report, which is based on a survey by KBC Bank Ireland, also explodes the myth that “the wall of money” of up to €13bn saved by households during the pandemic will lift all boats for society, the bank’s chief economist, Austin Hughes, has said.
Mr Hughes said the main finding of the bank's survey shows that the fallout of the pandemic is much more discriminating than recent GDP macroeconomic figures would suggest.
It shows there is a group of households who have had “a good pandemic” and have improved their chances in securing good housing but also a group of equal size whose life prospects have got a good deal worse.
“The results suggest an increased focus on living conditions that would likely act to boost property demand by a significant cohort of consumers but also suggest significant numbers see Covid-19 impacts making property purchase a more remote prospect for them,” according to the KBC Bank survey.
The survey found “marked differences” which probably show “the uneven impact of the pandemic on income and employment prospects and, consequently, the accessibility of home purchase”.
Mr Hughes said the benefits of working from home during the pandemic will also likely fall unevenly across households.
However, he said that people who are working in hospitals or in low-paid jobs need ready access to frequent public transport and therefore cannot travel far because access to their essential jobs will then become more limited.
Mr Hughes said the results point to the need to build more social housing as a way of increasing the chances of many people to access housing.