Housing supply is unlikely to meet demand “until at least the end of 2023”, a new analysis of the property market has revealed.
The data from the Banking and Payments Federation Ireland (BPFI), the business group for lenders, warns the impact of Covid-19 on housing supply is significant and will have an impact for years to come, undermining supply and causing further stress for the mortgage market.
The disruption caused by the construction shutdown early this year and the impact of Covid-19 on the wider economy mean that supply will not catch up with demand for several years. Only 20,000 new homes will be completed this year, short of the 35,000 annual units that are required, BPFI chief economist Ali Ugur said in The Irish Examiner.
Taoiseach Micheál Martin estimated that completions figure will be even lower, at 18,000.
“With a decline in both completions and commencements of new builds this year due to the current pandemic, the supply of housing stock in the year ahead will now fall well short of expected current and pent up demand,” Mr Ugur said.
This comes amid “the significant rebound in both mortgage drawdowns as well as mortgage approvals”.
Mr Martin, speaking on Monday at the launch of an affordable housing scheme in Carrigaline, Co Cork, said the impact of Covid-19 on housing production had been severe.
“We have allocated substantial funding; the issue is capacity, and capacity to deliver. That is why we kept construction open during level 5 and the second wave of the pandemic, because we have to get output up,” he said.
“During 2020, construction output took a hit because of Covid and because of the first lockdown. It is going to be very difficult to get to 18,000 units completed in 2020, that is not enough.
“We are targeting 25,000 units next year, with additional emphasis and focus on affordable housing. We will not be happy until we get to approximately 33,000 per annum, because that is what the ESRI [Economic and Social Research Institute] is saying in its research that we should be at, in terms of meeting social and affordable housing. We need to do much more.”
