Political consensus finally behind drive to deliver major new housing supply

We need to build, like crazy, and not just for any one, particular housing need and demographic.
Political consensus finally behind drive to deliver major new housing supply

Long, long after an election, and deep, deep down into a pandemic, the country is united on only a few key fronts: to roundly beat Covid-19, get the economy and jobs back, sort out the nation’s health and, (longer-term) health service, and then to resolve the country’s housing needs and stuttering, always-unresolved crisis.

How hard can that be?

Well, we’re all ‘at one’ on the coronavirus threat and getting past it as fast as the country and planet can dispatch it.

Thankfully, there’s nearly as much consensus on getting housing and home provision to the top of the political agenda, across all parties and persuasions.

We need to build, like crazy, and not just for any one, particular housing need and demographic.

In the longer term, it’s been estimated that Ireland will need a 60% increase in housing stock, some one million additional houses in the next 25 years.

We need to get them in the right places, with the right services, at an appropriate density, and affordable.

We need not just the private market (which is rousing well from Covid-19 site’s shut-downs with market activity remarkably resilient and demand strong: see below) and we need not to be relying on private developers to deliver social housing almost as an afterthought, or a quick buck is selling out an entire scheme.

We need homes across all fronts, and ownership/occupancy models, private to purchase, affordable housing schemes, social provision, cost-rentals, shared equity/ownership, PRS, niche sectoral provision.

Similar to a successful model in the UK, finessing a supported ownership or equity loan arrangement would broaden the cohort of citizens and residents who earn too much to quality for social housing but who can become home-owners and stakeholders, with an asset to their name, and a financial bulwark for their retirement years.

Time for action, not talk 

What’s different now is the level of consensus.

It’s probably not making too political a point to say that Sinn Féin had the most cohesively-thought out and deepest understanding of Ireland’s housing needs going into the general election (remember that far-distant, pre-Covid-19 event?) 

If the result of that election, the self-created national ‘troika’ Government of FF, FG and the Greens doesn’t deliver on the priorities set out and the promises made in the Programme for Government, such as 50,000 social homes over a set time span, the next election will see serious casualties as a result.

The new Government will be harried from the offset on housing delivery (a notoriously slow ship to turn around or to set a course for) by the Opposition.

Most notably, Fianna Fáil will pay a price for any inevitable shortfalls in the next election.

Interestingly, Fianna Fáil has taken on two of the thorniest departments, Health and Housing, under its own wing (with FG keeping a grip on Finance!), so Minister with responsibility for Housing Darragh O’Brien will have his work cut out: there’ll be no period of grace.

Even though the volume of social housing needed, at least 50,000 over the expected life of the new government is reiterated in the programme for government (PFG): it’s been a target before, but the wider market needs multiples of that over the same time frame.

Shortages 

"But what about the other 140,000 homes required over the lifetime of the Government? What and where will they be?” 

Up until Q2 of this year, housing supply overall had been rising steadily post-crash, and could have been expected to hit 24,000 units this year.

Now, because of the three-month hiatus, it’s more likely the output by the end of 2020 will be down to 14,000 units, so we’ve taken an understandable step backward on the supply progression curve that had been evident until the past six months.

Confidence holds despite Covid-19 

This week, online sites showed a strong resumption in property market activity, with Daft indicating a strong June sales listing activity, back to ‘almost normal’ levels, according to TCD economics professor Ronan Lyons, and with prices on average back just 3.3% over the full year to June.

Despite early economic forecasts of devastation to global and local property markets, Ireland’s market seems to have thus far at least held to core confidence: after all, the supply/demand fundamentals haven’t really shifted, they’ve just been set askew by lockdown.

How the longer term picture settles will depend on wider factors, such as a second wave, overall employment recovery, and how banks assess lending risks on a sector by sector basis, a point addressed this week again in the Dáil and by the Central Bank.

Skilled Workers 

We’ve already had problems getting skilled workers from overseas, or returning emigrants, to fill the gaps evident over the past year as supply ramped up, and if/when they come to take up construction work here, the Catch-22 returns, where might they live?

Anecdotally too at least, there’s reports of thousands of mobile workers going back to their own native countries (such as Poland) if the Covid-19 threat is less there than here.

Munster’s estate agents — and, vendors — quite widely remark on how pleasantly surprised they were with market activity levels during and since lockdown: it wasn't a meltdown.

In tune with other major agencies, residential director with Savills Cork, Catherine McAuliffe, this week said it was “refreshing to emerge from the difficult days of the Covid-19 lockdown to discover a new energy in the housing market” and she asks “has this crisis made us a more decisive nation and are we tired of waiting around to see what might happen?” 

Heading into a fifth week of activity now back in offices, with a shortage of stock of new builds along with pent-up demand from three months of construction stasis, Ms McAuliffe said there’s currently a robust market for resales and new homes at present and they had experienced “higher activity levels in the Cork housing market than those seen for probably 12 months,” as Brexit’s progression had slowed sentiment and activity in the back end of 2019 and into early 2020, pre-Covid-19.

Combining viewing activity, and sales showed that “the predictions for the housing market during lockdown, tainted with price drops and double digit percentage decreases, were incorrect”.

With 2020 completion likely to be 10,000 units less than the 24,000 hoped for, likely to weigh in around 14,000 homes built, “for buyers this means less choice, as builders struggle to catch up with construction of homes that have already been sale agreed”.

“Secondly, it means robust and likely price increases as they consider releasing next phases” says the Savills director, pointing to rising delivery costs such as the new NZEB energy rating, adding c €5,000 per unit as well as rising Irish Water charges, and slower on-site delivery due to more rigorous working regimes.

The greater Cork market is due some new developments, and new phase launches on stream later this year as some momentum continues.

It seems not all builders and contractors will be taking the traditional two weeks’ ‘builders holidays’ this summer, may well drive on in ‘catch-up’ mode) some of which are indicated this weekend in these pages.

This week’s latest Daft report showed the wedge continuing between the costs of renting vs servicing a mortgage, with buying still a better economic choice for those are lucky enough to meet Central Bank lending criteria of 3.5 times income, and for those in employment not threatened by the pandemic, with Munster and Cork strong in pharma, IT, FDI, and other relatively unaffected sectors.

Help to buy 

"First-time buyers availing of the ‘Help to Buy’ tax rebate are dominating recent sales activity," said Cork Sherry FitzGerald New Homes Director Paul Hannon.
"First-time buyers availing of the ‘Help to Buy’ tax rebate are dominating recent sales activity," said Cork Sherry FitzGerald New Homes Director Paul Hannon.

In cities, the evidence is that new homes remained the top choice for buyers, with much of that down to Help to Buy scheme getting nudged forward to 2021 in this year’s budget.

National agency Sherry FitzGerald’s New Homes wing shows a resilient 600 new homes sales in Dublin, Cork, Limerick, and Galway to date this year, with 133 of these ‘sales agreed’ in June alone as activity picked back up.

Cork Sherry FitzGerald New Homes Director Paul Hannon has stated that they’ve had 40 sales in Cork since the start of June (lifting of lockdown) across a number of schemes, in the city and county.

“Those fortunate enough to be able to buy with secure jobs unaffected by Covid-19 are doing so with confidence.

"First-time buyers availing of the ‘Help to Buy’ tax rebate are dominating recent sales activity. 

"These buyers are also benefiting from big savings in owning rather than renting,” he said.

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