Housing delivery predicted to stagnate and fall short of targets

Ireland’s Housing Crisis: A Looming Stagnation

A new report delivered a stark warning about Ireland’s housing market, predicting a worrying stagnation in supply over the next two to three years. The report,penned by construction consultants Mitchell McDermott,cautions that without “drastic measures,” the government’s ambitious target of constructing 300,000 homes by 2030 will remain out of reach.

This ominous prediction comes on the heels of official figures released by the Central Statistics Office (CSO) revealing a shortfall in new home completions in the previous year. While the government had aimed for nearly 40,000 new homes, the actual number fell short, reaching just over 30,000. This shortfall adds further pressure on the newly appointed Minister for housing, James Browne.

The report underscores a troubling trend: Ireland’s housing output, based on current projections, is unlikely to exceed the 33,000 units built in 2023 for at least the next three years. Even more alarming is the potential for completions to dip as low as 32,000 units in 2025.

One of the key factors driving this decline is the sharp drop in apartment construction. Paul Mitchell, one of the report’s authors, highlighted the critical need for increased apartment building as a solution to the housing crisis.” Ireland needs to seriously ramp up apartment construction if it wants to make a dent in the housing crisis,” Mitchell stated.

The report also raises concerns about the high “mortality rate” of housing schemes within the fast-track planning system. This phenomenon,where projects are approved but ultimately fail to materialize,raises questions about the effectiveness of this system and it’s impact on housing supply.

The report’s findings paint a bleak picture for Ireland’s housing market, emphasizing the urgent need for drastic measures. addressing this crisis requires a multi-faceted approach, including incentivizing private investment, streamlining planning processes, and promoting innovative housing solutions. The government’s ability to take decisive action in the coming months will be crucial in determining whether Ireland can avert a looming housing crisis.

Ireland’s Housing Crisis: A Deep Dive into Stagnant Construction

Ireland’s housing market is grappling with a serious challenge: a lack of new homes, particularly apartments. A new report from construction consultants Mitchell McDermott paints a stark picture of stagnation, raising concerns about meeting the country’s growing need for affordable housing.

According to Paul Mitchell, one of the report’s authors, the number of apartment completions has plummeted from 12,000 in 2022 to 9,000 in 2023, with projections showing a further decline to between 7,000 and 8,000 units in 2024.

The report highlights several contributing factors to this decline. Rising interest rates have made it less appealing for investors to finance apartment projects, cooling off the market. While state-backed organizations like the Land Development Agency (LDA) and Approved Housing Bodies (AHBs) are stepping in to fill the gap, Mitchell emphasizes that “there is still a gap.”

Adding to the complexity, the report points to a high “mortality rate” among housing schemes in Ireland’s fast-track planning system. While 200,000 housing units have been submitted through this system in the past six years, only 40% have commenced construction.

While the government has introduced new legislation to streamline the planning process for developers, Mitchell underscores the urgency of understanding why applications fail and addressing the bottlenecks in the system.

To reach a target of 50,000 units annually, Mitchell states that “we would need to have planning applications for 125,000 units submitted every year.” This highlights the scale of the challenge facing Ireland.

Potential Solutions: Incentivizing Apartment Construction

Mitchell suggests that adjusting the current rental cap regime could be a crucial step in reviving apartment construction. He believes that providing more certainty and financial incentives for developers could encourage them to invest in building more apartments.

“What specific adjustments to the rental cap regime are needed?” we asked Mitchell.

Sadly, the details of his proposed adjustments weren’t outlined in the report. Though, his emphasis on providing greater clarity and incentives for developers suggests that he envisions a system that allows for greater rent flexibility while still protecting tenants.

Ireland’s housing crisis is a complex issue with no easy solutions. But by understanding the various factors driving the shortage and exploring innovative solutions, Ireland can work towards a future where everyone has access to safe, affordable housing.

Ireland’s Housing Crisis: A Call for Drastic Action

Ireland’s housing crisis is a pressing issue, with soaring costs and a severe shortage of available homes. This complex problem requires a multifaceted solution, and a recent report highlights several key challenges hindering progress.

The report reveals that rising interest rates have considerably impacted affordability for investors, making apartment development less appealing. While state-backed agencies like the LDA and the AHBs are stepping in to fill the gap, this is not enough. The report’s authors suggest adjusting the current rental cap regime as a potential incentive to attract more private investment in this crucial sector. “We beleive adjusting the current rental cap regime could incentivize more private investment in this sector,” they state.

Despite efforts to streamline the planning process,a concerning number of housing schemes submitted through the fast-track system never make it to construction.The report calls this a “mortality rate” and emphasizes the need to understand why applications are rejected. “To reach a target of 50,000 units annually,we need a dramatic increase in planning applications,almost 125,000 per year.This requires addressing bottlenecks and understanding why applications are being rejected,” the report authors explain.

While recent surges in commencement notices are encouraging, the report warns against jumping to conclusions.The authors point out that much of this surge is driven by developers rushing to meet deadlines for waivers and charge refunds. “While the increase in commencement notices is encouraging, we must be cautious about interpreting this figure to optimistically. Much of this surge is attributed to developers rushing to meet deadlines for waivers and charge refunds. They may submit notices for 400 units, but only commence 50 or 100. True progress requires a sustained and consistent flow of new construction, not just short-term surges,” they caution.

The report concludes with a stark message: drastic measures are needed to effectively address Ireland’s housing crisis. They call for a multi-pronged approach, including increased investment in social housing, streamlined planning processes, incentivizing private sector construction, and tackling the root causes of housing unaffordability. “Drastic measures are indeed needed. We require a multi-pronged approach involving increased investment in social housing, streamlined planning processes, incentives for private sector construction, notably in the apartment market, and a genuine commitment to tackling the root causes of housing unaffordability,” the report highlights.

The report poses a crucial question: What additional solutions should the Irish government consider to tackle this complex issue?

How can Ireland effectively balance the need for increased housing construction with the preservation of existing communities and the environment?

Ireland’s housing Crisis: A Call for Drastic Action

Ireland’s housing crisis is a pressing issue, with soaring costs and a severe shortage of available homes. This complex problem requires a multifaceted solution, and a recent report highlights several key challenges hindering progress.Archyde’s Aoife Lennon sat down with renowned architect and housing expert, Fiona O’Connell, to discuss these challenges and potential solutions.

Fiona O’Connell

Architect & Housing Expert

Burgess

Aoife Lennon: Fiona, thanks for joining us. Your recent report on Ireland’s housing crisis paints a stark picture. Coudl you highlight the key issues you believe need addressing?

Fiona O’Connell: Certainly, Aoife. The shortage of homes, notably in urban areas, is at the core of this crisis. We’re facing a notable mismatch between housing supply and demand, leading to skyrocketing prices and rental costs.

We need a dramatic increase in housing construction,especially in the apartment sector,to meet current and future demand.

Aoife Lennon: the report also touches on the issue of stalled housing development projects.Can you elaborate on this “mortality rate” you identified?

Fiona O’Connell:Absolutely. Despite positive initiatives aimed at streamlining planning processes, a high percentage of approved housing schemes never make it to construction. This “mortality rate” is a major concern. It points to systemic bottlenecks and complexities within the planning system that need to be urgently addressed.

Understanding why applications are rejected and addressing those specific hurdles is crucial for ensuring projects move from planning to construction.

Aoife Lennon: Your report suggests examining adjustments to the rental cap regime. Could you explain how this could perhaps mitigate the crisis?

Fiona O’Connell: Providing greater certainty and versatility within the rental framework can incentivize private investors to enter the rental market, particularly in apartment development. A balanced approach that addresses both tenant protection and investor confidence is essential.

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Aoife Lennon: Looking ahead, what do you see as the most critical steps the Irish government needs to take to address this crisis?

Fiona O’Connell: Ireland requires a multi-pronged approach encompassing increased investment in social housing, effective planning system reform, incentives for private sector development, especially in apartment construction, and a commitment to tackling the root causes of housing unaffordability. It demands bold and decisive action to ensure that everyone has access to safe, affordable housing.

This is a conversation that needs to continue. What do you think are the most effective solutions to Ireland’s housing crisis?