Sir, – Your editorial on housing supply rightly acknowledges the progress that the Government is making and notes that there are grounds for optimism as we look ahead (“The Irish Times view on housing supply: some progress on building new homes”, March 13th).
Through a combination of both funding and development, institutional investors have been responsible for enabling the majority of this output. Our own recently published research estimates that circa 60 per cent of the funding required to deliver total housing output in 2022 came from institutional funds. Your editorial refers to investment funds sentiment having cooled somewhat on the private rental sector citing external factors. Undoubtedly the dramatic change in interest rates has been a shock to the funding markets.
However, developments anticipated in the next 12 to 18 months mean assets will reprice and liquidity will return as expectations of buyers and sellers find common ground. Interest rates will moderate, not back to previous lows, but a new equilibrium will emerge. Meanwhile, institutional investors continue to be the largest funders of housing output. This may be an inconvenient truth for some yet a cursory look at the share registers of the two largest homebuilders show they are significantly backed by institutional funds and across the market in general non-bank lenders (institutional investors) continue to be the main suppliers of debt funding for home builders in general. There is an emerging view that the next government will set a revised target of delivering circa 50,000 new homes yearly which we estimate will need funding of the approximately €15 billion annually, of which about €9 billion will need to come from sources other than the State and the banks. The only viable and sustainable source of such funding is institutional investors. While some might wish it to be otherwise, a much-reduced banking sector and the State combined cannot even begin to close that funding gap. All political parties are now at advanced stages of preparing their housing manifestos. As the next general election draws ever closer, it behoves each of them to clearly spell out how they will facilitate funding of the housing market to address the supply needed and for the media to ensure they hold them to account based on a robust examination of the factual analysis referred to rather than a ready acceptance of any alternative funding narrative which has no basis in reality. – Yours, etc,
PAT FARRELL,
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CEO,
Irish Institutional Property,
Dublin 2.