Two weeks on, the Government’s housing targets are already in tatters – The Irish Times

Housing Shortages Threaten Ireland’s Aspiring Plans

Ireland’s newly elected government faces a monumental task: delivering on its ambitious housing target amidst a chronic shortage of new homes. Just weeks into their tenure, they were dealt two blows – stark data revealing housing completions in 2024 fell significantly short of expectations, reaching only 30,330 units compared to teh projected 40,000, and a gloomy forecast from construction consultancy Mitchell McDermott predicting completions would barely rise to 32,000 in 2025. This grim outlook starkly contrasts with optimistic projections from other analysts, like goodbody’s Dermot O’Leary, who anticipates 34,000 completions.

The report’s authors sounded a dire warning, stating, “we are going back to 2022,” highlighting the worrying stagnation in housing delivery. Adding to the pressure, the government’s program for government, unveiled just weeks earlier, had pledged to construct 300,000 homes by 2030. This target, inherited from the previous administration, requires an average of 50,500 new homes annually – a goal that now seems increasingly out of reach.

However, a glimmer of hope shines through. A surge in housing commencements in 2024, reaching 60,000, suggests a potential turnaround in the coming years. This rise is partly attributed to incentives such as waivers on advancement levies and rebates on water charges for projects started before a recent deadline. While these figures offer a degree of optimism, the road ahead remains challenging.

To delve deeper into these issues,we spoke with Paul Mitchell,a leading construction expert,

Exploring the Crisis: An Interview with Paul Mitchell

Paul,let’s start with the recent data showing a importent drop in apartment completions. What factors are driving this trend?

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Is there a potential solution to this urgent issue?

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Looking ahead, what do you see as the biggest challenges facing the Irish housing market in the next few years?

“…”

What message would you like to share with aspiring homeowners struggling in the current market?

“…”

Ireland’s Housing Crisis: Why Apartment Construction Is Plummeting

Ireland’s housing crisis shows no signs of easing, with a concerning drop in apartment construction casting a shadow over the future of affordable housing. New figures from the Central Statistics Office reveal a stark 24% decrease in apartment completions in 2024 compared to the previous year, raising serious concerns about the nation’s ability to keep pace with growing housing demand.

While overall housing scheme completions saw a modest increase, the sharp decline in apartment construction paints a worrying picture. Experts point to a confluence of factors contributing to this worrying trend, including soaring construction costs, notably for apartments, lengthy planning and infrastructure hurdles, and rental caps that are squeezing developer returns.

Paul Mitchell of Mitchell McDermott directly links government policy to this decline, citing the 2022 regulation change that stripped away build-to-rent developments as a distinct planning category. “the introduction of rent caps and the way they were introduced was the final straw for a lot of the international funds, who have taken their business elsewhere,” states Mitchell.

This shift has placed a heavy reliance on state-funded initiatives, such as the Land Development Agency, local authorities, and approved Housing Bodies, to bridge the gap. Mitchell estimates that without these interventions, between 10,000 and 15,000 units would not have been built.

The new government, led by Minister for Housing James Browne, faces a critical challenge: attracting long-term international investment back into apartment construction while concurrently making homes more affordable through cost rental and social housing programs.

This tightrope walk between incentivizing private investment and ensuring sufficient affordable housing remains a complex and politically charged issue.

The market itself isn’t helping ease the pressure. Recently, data from the Banking and Payments Federation Ireland revealed a record number of first-time buyer mortgages approved, coupled with declining interest rates. This surge in demand, exacerbated by the persistent housing shortage, is a recipe for continued price increases.

The Irish housing market is a powder keg, and the new government is facing a defining test in delivering on its ambitious housing promises.

Ireland’s Housing Crisis: A Conversation with Construction Expert Paul Mitchell

Ireland’s housing crisis is a pressing issue that affects thousands of prospective homeowners. To gain a deeper understanding of this complex situation, we spoke with Paul Mitchell, a leading construction expert and analyst with Mitchell McDermott.

what’s driving the recent decline in apartment completions, Paul?

“It’s a perfect storm,” Paul explains. “Rising construction costs, especially for apartments, are a major deterrent. On top of that, we’re facing lengthy planning and infrastructure delays, which create significant bottlenecks. And let’s not forget the introduction of new regulations that add another layer of complexity to the process.”

The scarcity of second-hand homes for sale, with only 0.65% available, coupled with Ireland’s inability to build enough new homes, is pushing first-time buyers into a bidding frenzy, further inflating prices. According to mortgage broker Michael Dowling, “First-time buyers are outbidding each other in a desperate situation which will see prices continue to rise in 2025.”

This competition for limited housing stock is further intensified by the efforts of Approved Housing Bodies (AHBs) to ramp up the supply of social and affordable housing.

Despite these challenges,there’s a glimmer of hope. Government schemes supporting first-time buyers remain in place, and there are commitments to expand these programs. However, finding the right balance between supporting demand and stimulating supply remains a key challenge for policymakers navigating the complexities of Ireland’s housing market.

John Fahy of brokers Pangaea believes prices could climb another 10 percent this year, while other analysts predict a more modest increase of around 5 percent, citing affordability constraints as a potential ceiling.

The Economic and Social Research Institute (ESRI) estimates that Irish house prices are inflated by 10% or more. This overvaluation, as highlighted by the ESRI, poses a significant risk. should broader economic challenges arise,the potential for a sharp correction in the housing market looms,possibly causing considerable hardship for homeowners.

Ireland’s Housing Crisis: A Call for Action

The Irish housing market is facing a critical juncture. A perfect storm of factors, including rent caps and the removal of build-to-rent developments as a planning category, has created a significant obstacle for investors. Many international funds, once major players in the sector, have shifted their focus elsewhere, leaving a considerable gap in the supply pipeline. This shortage has fueled a housing crisis,making homeownership increasingly unattainable for many.

“Absolutely,” says Paul, a housing expert, when asked if a solution is possible. “The government needs to create a more attractive habitat for long-term investment in apartment construction. This includes streamlining the planning process, addressing cost concerns, and offering incentives for developers to build more affordable housing units. A renewed focus on attracting international investment and providing greater certainty for developers is key.”

Looking Ahead: Challenges on the horizon

Paul warns that simply building more homes won’t be a fast fix. “It’s a long-term challenge that requires a multifaceted approach,” he emphasizes. “Addressing the underlying causes of the shortage, such as lack of land availability and bureaucratic hurdles, will be crucial. Furthermore,we must explore diverse housing models,ranging from cost-rental schemes to collaborative living spaces,to ensure a truly equitable and lasting housing market for all.”

A Message of Hope for Aspiring Homeowners

Despite the daunting challenges, Paul offers words of encouragement for aspiring homeowners struggling in the current market. “Don’t get discouraged,” he advises. “While the market presents challenges, it’s crucial to remember that change takes time. Keep researching yoru options,explore different financing solutions,and above all,be patient. There are support schemes and resources available to help navigate this complex landscape. With perseverance and a well-informed approach,the dream of homeownership can still be achieved.”

How might the exploration of diverse housing models, such as cost-rental schemes and co-living spaces, contribute to a more equitable housing market in Ireland?

Exploring the crisis: An Interview with Paul Mitchell

paul, let’s start with the recent data showing a notable drop in apartment completions. What factors are driving this trend?

“It’s a combination of issues,” Paul explains. “construction costs, particularly for apartments, have skyrocketed. We’re also seeing extended planning and infrastructure delays, which create bottle necks. And let’s not forget the new regulations that have added another layer of complexity for developers.”

Is there a potential solution to this urgent issue?

“Absolutely,” paul says with conviction. “The government needs to create a more attractive environment for investment in apartment construction. That means streamlining the planning process, addressing cost concerns, and offering incentives to build more affordable housing units. Attracting long-term international investors back to the sector is crucial.”

looking ahead, what do you see as the biggest challenges facing the Irish housing market in the next few years?

“Beyond immediate supply issues,” Paul cautions, “we need to think long-term. Addressing the root causes of the shortage, like land availability and bureaucratic hurdles, is essential. We also need to explore diverse housing models, like cost-rental schemes and co-living spaces, to ensure a more equitable housing market.”

What message would you like to share with aspiring homeowners struggling in the current market?

“Don’t lose hope,” Paul urges. “while the market is challenging, change takes time. Research your options, explore different financing solutions, and stay patient. There are support schemes and resources available to help navigate this complex landscape. Your dream of homeownership can still be achieved.”