The Central Bank has released encouraging news that the Government is on course to achieve its goal for completed homes this year. The Bank’s most recent three-monthly report indicates that this year, about 35,000 homes will be finished, exceeding the Housing for All strategy goal of 34,600, and expected to increase to 36,500 and 37,000 in 2025 and 2026 respectively.
The report also suggests promising signs that these later goals are attainable, as there are currently over 58,000 granted planning permissions from 2019 onwards, which have yet to reach the initiation phase. Nonetheless, the Bank remains cautious in its optimism, stating that the predictions hinge on minimal setbacks in the planning system and enhanced connection timelines to utilities.
Regardless of these conditions and the possibility that these developments might have been partially attained due to difficulties elsewhere in the economy, it is probable that the Government will assert that its housing plans are beginning to succeed.
A challenge arises with the commercial property sector’s deceleration that has released labour and other materials for residential construction. Contributing to this slowdown of commercial properties are the increase in remote work after the pandemic and the contraction in the technology sector. The subsequent effects will eventually surface, but ultimately, the cost will have to be borne by someone, likely financial institutions and various investors in the initial stages.
Moreover, the report on housing completions conceals another key shift in the market; private investment funds that have been the backbone of the build-to-rent market in recent years are re-evaluating their strategies. They are responsible for approximately one in five new constructions.
The ‘easy money’ that powered these projects is no longer available as international interest rates climb. It will not necessarily be a significant loss if some of these funds depart, but it will bring about a funding gap that will need to be filled. According to the Banking and Payments Federation, who represents Irish lenders, the Government will likely need to take up this role.
The escalation in the provision of newly constructed homes is a positive step, however, its significance shouldn’t be overstated. The government’s very own Housing Commission stipulates that an annual requirement stands somewhere between 42,000 to 62,000 homes. The imminent updated population estimates from the ESRI are expected to underline the necessity for further home construction. Notable concerns persist concerning the style of homes being built, their geographical position, and their purchase price.
Government strategies aim to confront these concerns, however, it’s evident that this is a long-term undertaking. Whilst acknowledging the advancements made, it’s crucial for ministers to also appreciate the journey yet to be traversed and the policy queries left to be addressed. The government’s policies need to remain flexible in order to reward adaptation and improvement in the face of new information and unique circumstances.