Some 28,000 homes will need to be built each year to meet demand, ESRI says

The State needs to build 28,000 new homes a year for the next two decades just to keep pace with population growth, according to a new report.

This is signficantly ahead of the current level of supply, which is expected to be in region of 20,000 this year.

The study by the Economic and Social Research Institute (ESRI) estimates the amount of housing needed based on the Republic’s projected population growth out to 2040.

Based on assumptions about future trends in mortality, fertility and net immigration, which is expected to be in the region of 15,000 per year, the report calculates that the State’s population will increase by around 926,000 between 2016 and 2040, resulting in a total population of 5.66 million.

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Combining these trends with expected changes in household size and an assumed rate of housing obsolescence - the number of homes that become unusable each year - it estimates that around 28,000 new homes would be needed every year over the medium term just to keep up with the demand driven by population growth.

However, as international migration is the key driver of population growth here, the ESRI’s study examines additional scenarios that incorporate higher and lower migration assumptions.

In a high migration scenario, with net immigration of 30,000 each year, the Republic’s population would reach almost six million by 2040, necessitating an annual housing build of 33,000 units a year.

Conversely in the low migration scenario, where net immigration drops to 5,000 over the short run, the State’s annual housing need would be closer to 26,000 units.

Population growth

The study indicates that the eastern and midland regions would experience the fastest population growth .

Dublin is expected to continue to have the highest population share (28.4 per cent of the total population), although the mid-east region, the area surrounding Dublin, is likely to experience the fastest population growth, with a yearly increase of 1 per cent.

Relative to their population shares, the research expects higher levels of housing demand in Dún Laoghaire-Rathdown, Cork City, Meath and Kildare and lower levels of demand in Mayo and Fingal in Dublin.

Adele Bergin, one of the report's authors, said: "Regional housing demand, both now and in the future, has significant implications for housing policy in terms of the number of housing units required and the areas they are needed."

Fellow author Abián García-Rodríguez, said: “Higher wages, higher employment or lower house prices in a county can encourage internal migration, make a county’s population grow faster and lead to increased housing demand,” he said.

“Housing demand is naturally larger in the more populated counties, but some counties have a higher demand intensity as they either have higher headship rates or their population is moving into prime household formation age,” he added.