Words: Dylan Murphy
“We risk experiencing another decade of inadequate housing supply and resulting upward pressure on residential prices and rents.”
The government should borrow an additional 4 to 7 billion euro a year in order to provide enough affordable housing to meet demand according to a new report from The Economic & Social Research Institute (ESRI).
ESRI stated that without “significant” spending on constructing new homes, Ireland faces another ten years of rising prices and rents.
The report addresses the undersupply of residential housing which has been exacerbated by the pandemic and the subsequent restrictions. It argues that a “significant increase in the provision of publicly provided housing is now required to help bridge the growing gap between actual supply levels and the structural demand for housing”.
Their analysis suggests that if the government were to double the existing capital investment in State provided housing to €4 billion per annum, it would have the potential to deliver approximately 18,000 units per annum, based on current production levels.
It argues that the private sector, on its own, is ill-equipped to meet current housing demands.
Given the government’s current budget for 2021, it would “still leave a significant imbalance in the residential market over the medium term”. The report also noted that given the imbalances that have accumulated over the past ten years would mean that “even if housing supply were to approximate the level of structural demand in a given year” it would not be enough.
The expectation is that the State will construct around 15,000 new homes this year, which is a decrease from 20,000 in 2020. The ESRI estimates the level of demand currently is 35,000 a year.
The author of the report, Kieran McQuinn, said, “While there are many pressing demands for additional State capital investment in residential construction, we risk experiencing another decade of inadequate housing supply and resulting upward pressure on residential prices and rents.”
Click here to read the ESRI report ‘With ‘g’ greater than ‘r’, should we be borrowing
to increase Irish housing supply?‘.
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