Is there anything to be said for another housing target?
The Government’s projected housing completions target for 2023 is 29,000. Now, Taoiseach Leo Varadkar has told his parliamentary party colleagues that the annual figure will have to be ramped up to 40,000 after 30,000 were built last year.
The Housing Commission, meanwhile, said earlier this year that 62,000 houses may have to be completed each year up to 2050 to meet demand. Yet, the latest figures from the Banking and Payments Federation of Ireland (BPFI), published on Tuesday, indicate that despite “encouraging” signs, some 27,000 units are expected to be finished in 2023, about 3,000 fewer than last year.
However you slice it, the numbers just aren’t going to add up to anything close to a win for Minister for Housing Darragh O’Brien.
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Despite the fact that almost 30,000 homes were completed in 2022, an increase of 45 per cent on a Covid-dominated 2021, the number of new units is expected to flatline and fall back to 2019 levels this year. There are reasons to believe that the outlook could be even worse this year, given the uncertain economic outlook. In a note published on Monday, analysts at Goodbody Stockbrokers said the outlook for supply is stable but “at levels substantially below estimated housing need”.
[ Varadkar's new housing target shows that there's a mountain still to climbOpens in new window ]
While the BPFI points to the uncertain path for interest rates and the still-elevated construction materials costs as the main threats to supply, Goodbody’s analysts note that issues with the planning system could conspire to choke the pipeline of new units.
Pointing to a lack of “resources at the planning board, changes to the planning system and viability concerns”, they highlight a 44 per cent year-on-year decline in the number of new residential units for which permission was granted in the fourth quarter of 2022. This includes a 54 per cent decline in the number of permissions for apartments, a 28 per cent decline in housing permissions with multi-unit developments down 25 per cent and one-off permissions down by 33 per cent.
Although there have been some victories in recent years, there is very little to sing about. Even the most optimistic estimates for this year are still well off the pace that most of the experts believe is required.
