Irish housing demand just keeps getting higher and higher

When the State was only building a trickle of homes in the wake of the 2008 crash (we were building fewer than 10,000 a decade ago), experts estimated that the level of structural demand in the economy was 30,000-35,000. People wondered if we had the requisite manpower and resources to build to that rate. It seemed a long way off.

Last year, new dwelling completions hit 33,000 units but now the goalposts have shifted with most agencies and commentators suggesting we need 50,000 new homes a year. Reflecting this new target, Taoiseach Simon Harris pledged to build 250,000 homes over five years in his maiden speech as Fine Gael leader recently.

[ Rules blocking bulk buying of housing divert 50,000 units to owner-occupiers, say officials ]

The Economic and Social Research Institute (ESRI) will publish Government-commissioned research later this year, estimating the underlying level of housing demand in the country right now. It is expected to be in excess of 50,000. Harris might have had a sneak preview hence his pledge.

According to stockbroker Davy, the goalposts have shifted again. In its latest economic commentary, it estimates the State needs to build almost 85,000 new homes a year to address the structural shortfall in housing.

[ Irish house prices now 10% above their boom-time peak ]

A key demand driver is population growth. Davy forecasts the Republic’s population will grow to 5.9 million by 2030, which it notes is 524,000, or 10 per cent, ahead of the Government’s National Planning Framework (NPF) baseline of 5.36 million.

Closing Ireland’s housing shortfall compared to other European countries based on these population projections would require just under 85,000 units a year until 2030, or 2.6 times the 2023 level of completions, it says.

On an optimistic note, it believes new dwelling completions will rise to a post-crash record of 42,000 next year albeit while noting this remains “well short of our estimate of underlying housing need”.