A new study of the housing market says we require 90,000 new homes over the next seven years – but 86pc of them should be within the Dublin commuter belt. The skewed nature of the market means that while a chronic shortage exists in some areas, there will be little work for builders in more rural parts of the country.
The Economic and Social Research Institute (ESRI) report says we need to build about 12,500 units a year up to 2021.
Dr Edgar Morgenroth of the ESRI has concluded that the property market has a massive oversupply in rural parts of the country, but huge shortages on the east coast.
His report comes up with a lower demand than previously suggested by taking vacant houses into consideration, and then looking at what is needed on a county-by-county basis.
Most houses are needed in Dublin, with demand also in Louth, Meath, Kildare and Wicklow. There will be “significant” housing shortages in the capital and its surrounds unless building levels begin to pick up rapidly.
“Of the 90,000 additional housing units required between 2011 and 2021, over 60pc (54,000 units) are needed in Dublin and a further 26pc are needed in counties Louth, Meath, Kildare and Wicklow. “Thus the requirement for additional housing units is projected to be highly concentrated in the Greater Dublin area,” Dr Morgenroth said.
He noted that most of the building of homes last year was actually outside Dublin.
Only 1,360 units were completed in the capital, out of a total of 8,300 houses built.
Now there is a need thousands more units in the Dublin region alone.
“Given that the total number of housing completions recorded in the Greater Dublin Area during the 2011-2013 period is below what is needed to meet demand, this will result in significant housing shortages in the Greater Dublin Area if the rate of housing completions does not increase rapidly.”
The rate of construction across the east coast should be around 12,500 a year up to 2021.
The report concludes that there is no one housing market in Ireland, but instead a multiple of local housing markets.
It is estimated that around 18,000 people a year are likely to want to set up a household, prompting the need for builders to get to work.
There are 230,000 vacant housing units around the country.
Counties Leitrim, Roscommon and Tipperary have more houses than needed to meet demand from people who want to set up home in these counties.
Kerry, Monaghan and Longford will not need any new housing units up to 2021.
More housing will be needed in Galway, Cork and Westmeath, in addition to Dublin and east cost counties.
“However, for many counties the level of vacant stock and the projected demographic change is such that no additions to the housing stock are necessary to meet demand for the period up to 2021,” the report, entitled ‘Projected Population Change and Housing Demand: A County Level Analysis’, says.
The expected demand for new houses is lower than previous conclusions about the numbers of new homes needed.
Calculations by the State’s Housing Agency last month prompted the Government to commit to building 25,000 units annually over the next six years.
Last month new Tanaiste Joan Burton committed to building 25,000 houses a year.
It followed estimates by the State’s Housing Agency that we need to build up to this number of homes a year.
Ms Burton said: “We will set in train a construction programme to triple the number of houses built to 25,000 a year by 2020.”
To meet the pent-up demand for housing the Society of Chartered Surveyors has called for the construction of more European-style family apartments.
It also called for a reduction of VAT on new home building to help tackle the housing supply problem.
It published a strategy that it said would ensure there was an adequate supply of houses in urban areas and in Dublin in particular.
The society also said that if future apartments were designed for family living it would reduce pressure on the supply of traditional three and four-bedroom homes.
Among the measures proposed is an exemption of the property tax for people trading down, the establishment of a builders’ finance fund, and the introduction of a vacant site levy on vacant sites with residential development potential.
The society said only 8,000 new homes were built in Ireland last year and there is now a need for 80,000 new units, with around 16,000 per annum over the next five years.
To kickstart house building, the society has called for a reduction in development contributions for two years and a reduction in VAT on new home construction from 13.5pc to 5pc.
The calls for more building come as the number of people approved for a mortgage has hit the highest level in three years.
Some 2,268 people got the go-ahead from their bank to borrow money to buy a home, according to the Irish Banking Federation.
It was the highest level of approvals since the Banking Federation series began in 2011.
The average approval value was €179,012 in June 2014, up 5.5pc in the year.
The value of mortgages approved per month, on average, in the three months to the end of June was €406m.
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