In the wake of the financial turmoil, residential construction in Ireland plummeted drastically in the early part of the 21st century. The country saw a marked reduction in the production of state-sponsored houses, falling to less than 10,000 annually. The output of social housing was virtually zero.
Industry experts calculated that the economy’s housing needs would require 30,000 to 35,000 units annually. Questions were raised regarding the availability of the necessary workforces and resources to meet this requirement. Meanwhile, the target seemed far removed from the current reality.
Last year, newly completed dwellings reached the milestone of 33,000 units. However, the objective posts are shifting now as many agencies and analysts suggest expanding the output target to 50,000 new houses annually. Davy Stockbrokers is going even further, suggesting an annual demand of 85,000 units, spurred by the unforeseen population boom.
The Central Bank is the latest authority to echo the call for an increase to 50,000 houses annually. In their latest quarterly economic review, the regulatory body addressed the economic impacts and policy matters resulting from a ten-year deficiency within the housing sector.
Latent demand, future population expansion and rates of household setup indicate that approximately 52,000 new residences may be required annually until mid-century. This represents a spike of 20,000 units from the current supply level of 33,000.
Potentially, swift action could solve this issue; building 68,000 homes over a decade is an attractive proposition, particularly following Apple’s recent €14 billion contribution to the country.
Nevertheless, the Central Bank’s assessment highlights the potential risks of trying to accelerate the process too rapidly. It stated that the close-to-capacity economy may be put at risk by hurried actions to alleviate the housing shortage, and hence macroeconomic risks must be prudently managed.
Robert Kelly, the Central Bank’s Director of Economic and Statistics, stressed that an extra 30,000 construction workers would be required in addition to the existing 170,000.
“[The resolution to the housing crisis isn’t going to come from Sinn Féin or the Coalition]
The recommendations from the banking sector in the meanwhile include enhancing the productivity of our current building industry by simplifying the convoluted planning system and increasing the provision of zoned and serviced land.
Boosting these areas would also aid the construction sector in sustainably attaining enough development finance to support increased house building, the sector asserts.
One hindrance to efficiency within the construction industry stems from the small size of the firms, which are primarily on the smaller side, hence their limitations in scale construction. The low investment in machinery and technology since the financial crunch is yet another factor, which further depletes productivity.
Mr Kelly stated, “The potential to utilise some of these advances in technology might assist in elevating output without demanding more labour.”