Housing delivery in Ireland is forecast to “stagnate” over the next two to three years with the supply of new homes falling well short of targets, a new report has warned.
The study by construction consultants Mitchell McDermott also said the Government had “little chance” of achieving its target of building 300,000 new homes by 2030 “unless drastic measures” were taken.
It comes in the wake of official home completion figures from the Central Statistics Office, showing the number of new homes built last year fell back to just over 30,000 despite Government pledges it would be close to 40,000.
Mitchell McDermott’s analysis is likely to heap pressure on new Minister for Housing James Browne.
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It said Ireland’s housing output, based on all the macro indications, would not eclipse the 33,000 units achieved in 2023 for up to three years and that completions in 2025 could be as low as 32,000 units.
The report noted that planning permissions, one of the key indicators of future supply, were granted for 35,000 homes last year, one of the lowest figures of the last six years and down from 41,000 in 2023.
One of the report’s authors, Paul Mitchell, pinpointed the fall-off in apartment projects as a key concern. He said there were 9,000 apartments built last year, down from 12,000 the previous year, and this was projected to fall further, to 7,000-8,000 this year.
Part of reason for this is the higher interest rate environment, which had made it less attractive for funds to finance apartment developments here.
And while the State-backed Land Development Agency (LDA) and Approved Housing Bodies (AHBs) have stepped into the breach, “there is still a gap,” Mr Mitchell said.
[ Housing completions fall short of 2024 Government target of 40,000 unitsOpens in new window ]
To make it more attractive for funds, he advocated adjusting the current rental cap regime, applying it to tenancies rather than buildings.
Mitchell McDermott’s report said a key block on housing delivery was what it described as the “high mortality rate” of applications for housing schemes in the fast-track planning system. About 50 per cent of housing permissions are delivered via fast-track schemes.
While fast-track planning applications for 200,000 housing units had been submitted over the last six years, barely 40 per cent have commenced or are constructed, it said. And while progress has been made in tackling the fast-track backlog, 9,000 units are still awaiting planning decision.
New planning legislation introduced last year promises to speed up the process for developers.
“Given the scale of our housing crisis, its vital we understand why the attrition rate is so high and address blockages in the system,” Mr Mitchell said.
“Based on current ratios, if we want to build 50,000 units a year, we would need to have planning applications for 125,000 units submitted every year,” he said.
While 60,000 commencement notices (or housing starts) were submitted in 2024, an 82 per cent increase on the 33,000 submitted in 2023, the increase was largely attributed to developers rushing to meet deadlines for development levy waivers and water connection charge refunds, the report noted.
While the waivers may have unlocked some apartment schemes which were previously unviable, “a misleading narrative was generated around the 60,000-commencement figure,” Mr Mitchell said.
“That figure was quite widely reported on, and, on the surface, it did seem to indicate progress was being made. The reality is that while a developer may put in a commencement notice for 400 units, they might only commence 50 or 100,” he said.
“They wanted to ensure that they would be eligible for granted waivers for the maximum number of units they commenced, but there is no penalty if they commence less,” he said.
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