The chief economist at the Banking and Payments Federation Ireland, Dr Ali Ugur has said that private investment funds are “reconsidering” involvement in the housing sector because of increasing interest rates.
When asked if this was likely to mean more space in the housing market for others or if it would fall to the Government to partner with the private sector, Dr Ugar told RTÉ radio’s Morning Ireland that he thought it “more than likely” that the Government would partner with the private sector in initiatives to provide accommodation for social and affordable housing cost rental as well as the private owner-occupier segment.
There was “unlikely” to be a return to the low interest rate environment of the past, he said.
In relation to house completion figures Dr Ugar said the majority were in housing schemes, with apartments comprising 35 per cent of completions in 2023. While building costs had increased since the pandemic in terms of raw materials and labour, they had recently started to decline, but remained higher than before the pandemic.
“If you look at the total completions in terms of the market share, institutional investors account for around one in five in terms of the total new builds. And when I said institutional investors, they include both private and public. And public actually accounts for nearly more than half of that. So there is a significant portion of the public bodies that are trying to finance the building or purchase of these units.”
Dr Ugar acknowledged that affordability remained a concern for much of the population and he said there needed to be a focus on “building better”, making better use of land where high density apartments could be an option. The significant growth in the economy and increasing population meant there would be significant demand for such units.
“In terms of housing supply, we’ve made significant progress. So if you look at the 2023 output, it was more than the five years of supply between 2011 to 2015. But there is still demand from the first time buyer segment within our mortgage approvals data. In terms of the systems of future supply, I think there’s going to be a need for Government to risk share with the private sector for it.”
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