Number of new homes built this year to ‘flatline’ and be well below estimated need

About 27,000 houses will be built this year, which is substantially below Ireland’s estimated housing need, according to analysis from Goodbody.

The Government’s Housing for All strategy estimates Ireland will need an average of 33,000 new homes to be provided each year from 2021 to 2030.

However, unpublished research by the Housing Commission says Ireland may need up to 62,000 homes built per year until 2050 to meet demand – almost double the annual target in the Government’s master plan for this decade.

In a note on Monday, Goodbody said housing commencements had “flatlined” in recent months, with a total of 2,046 units commenced in February, taking the total commenced in the past three months to about 6,000.

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This is the same level of commencements as a year ago and takes the total over the past 12 months to 27,000. This is 23 per cent below its recent peak.

“Despite the well-known concerns about the apartment sector, the housing sector is the bigger drag on commencements,” said Goodbody chief economist Dermot O’Leary.

In the three months to end-February, the number of apartment commencements was up 10 per cent year-on-year, while scheme housing commencements fell 1 per cent year-on-year.

“This is surprising, but may be partly due to increased State involvement to ensure active planning permissions are not left idle,” said Mr O’Leary. “The data do not alter our view of a decline in housing output in Ireland this year.

“We are forecasting 27,000 completions in 2023, down from 30,000 in 2022. This remains substantially below Ireland’s estimated housing need.”

The number of residential units granted planning permission fell by 44 per cent year on year in the fourth quarter of 2022, according to new Central Statistics Office data.

This followed a sharp fall in the third quarter also, leading to the lowest second-half performance since 2017.

The decline was led by a 54 per cent year-on-year decline in apartment permissions. However, the number of permissions for houses fell by 28 per cent year on year, with multi-unit developments down 25 per cent and one-off permissions down by 33 per cent.

“A combination of factors are at play in this downward trend, including resources at the planning board, changes to the planning system and viability concerns,” continued Mr O’Leary.

“The fall must be put in the context of the surge in permissions since 2019, the current level of residential activity and the ongoing legal challenges to planning permissions.

“In the three years to the second quarter of 2022, there were 127,000 residential units granted planning. However, we estimate that only 80,000 units were commenced over that period.”

A report by Mitchell McDermott noted that 29,000 units that came through the strategic housing development planning process have been subjected to judicial review, while a further 29,000 have not commenced due to viability issues.