Ireland needs to attract a “disproportionate” amount of foreign capital if it wants to expand housing supply in line with Government targets, a lobby group for institutional property investors has said.
In a new report, Irish Institutional Property (IIP), which represents large, institutionally backed investors including real estate investment trusts and other landlords and builders, said despite the expanded role of the State in delivering housing, about 60 per cent of the funding required to increase housing supply will have to come from abroad.
IIP said the Government’s Housing for All strategy, which targets 40,000 new units each year from the end of this decade, would likely have to be revised upwards to 60,000 to account for demographic shifts.
In this context, it estimates that total investment capital of €18.5 billion would be needed each year to deliver this target – more than 61 per cent of which would have to come from abroad given the lack of domestic sources.
“This provides further evidence of the need for policy stability and predictability which supports the continued deployment of international capital here, to ensure we can effectively tackle the housing crisis and deliver the required output of homes needed to provide a sustainable housing sector which meets the needs of all who require a home,” said IIP chief executive Pat Farrell.
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Experts have, however, questioned whether undersupply is at the core of the Republic’s housing crisis. With some 32,500 units delivered last year, the highest level of delivery since 2006, and a similar number of houses expected to be brought to market this year, supply levels have increased dramatically in recent years.
Writing in The Irish Times earlier this year, John McCartney, director and head of research at BNP Paribas Real Estate, said: “Today’s problem is high prices and rents relative to incomes, a legacy of undersupply in the past.” Against this backdrop, demand rather than supply-side interventions are more likely to help first-time buyers and other house-hunters at a time when house prices and rents are already beginning to decline, he argued.
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