Whether you’re a struggling renter or a hopeful home buyer, you find yourself in the same predicament every time you log on to real estate sites. When it comes to Ireland’s housing crisis, it’s hard to see the light at the end of the tunnel.
Rising prices eclipse buyers’ dreams. But will 2022 be any different?
This week, the Parliamentary Budget Office, which provides economic and fiscal information to TDs and senators, released stark findings that confirmed a “collapse” in homeownership among young adults.
He found that the cost of housing here is “extremely unaffordable” by international standards, partly because of “rising rents” and “soaring house prices”. Prices have increased by 77% since 2011, against a 23% increase in income.
The outlook isn’t good either. This week has also seen research from estate agents DNG predicting an average rise in regional housing markets of 12-13% in 2022, while price growth in Dublin will more likely be in the 6%-8% range. .
A so-called “locked-out” generation is unlikely to get a break anytime soon. This, in turn, has long-term consequences and contributes to a growing wealth divide between younger and older generations, observers say.
There will be progress this year, however, according to the Construction Industry Federation, which represents builders and developers.
James Benson, director of housing at CIF, points out that more than 20,000 homes were delivered last year, despite the industry being largely prevented from operating in the first quarter of 2021 due to Covid-19 measures.
This year, it expects production to be between 26,000 and 27,000, which would exceed the government’s target of 24,600, as set out in its “Housing for All” plan for 2030.
It is expected that 33,000 homes will be delivered per year from 2024. This is the number of new homes needed per year to meet demand, according to the Economic and Social Research Institute (ESRI). Will the year 2022 see a stabilization of real estate prices or even a decline? It seems unlikely.
According to CIF, the cost of raw materials involved in building a three-bedroom timber frame semi-detached house has increased by around €15,000 to €17,000, due to recent global inflationary pressure.
While inflation may ease, there isn’t much hope for prices to fall.
Removing some barriers to construction could be a way to boost supply and possibly ease price pressure, if the savings are passed on to buyers. CIF has long campaigned for improvements in the planning process, a reversal of dezoning trends and an increase in the provision of infrastructure to serve development sites.
One housing expert, however, worries that while production may increase, there won’t be a significant increase in the number of homes to buy.
Lorcan Sirr, Lecturer in Housing, Planning and Development at TU Dublin, breaks it down:
About a quarter of housing production is single dwellings, of the type planned and built by a young family, often in rural areas. These houses do not come on the market.
Just under 20% are apartments, most of which are built for rental and therefore do not come on the market.
The rest, more than half, are mostly house projects or housing estates. They come on the market, but there are not enough of them.
Dr Sirr explains that around a quarter of the total housing production is then allocated to social housing.
Consequently, the number of homes available for purchase is much lower than the total production of homes. In fact, that number has remained relatively stable over the past few years, at around 7,500.
Even with projected increases in housing production, Dr Sirr fears the number of homes available to buy will not change dramatically. This is bad news for young people struggling to get on the property ladder.
At the heart of this crisis are the Irish homeless.
With housing production set to increase over the next year, Wayne Stanley, policy and communications manager at Simon Communities of Ireland, said he struggled to see concrete evidence that it would help reduce the number of homeless people.
The latest figures show there were 9,099 homeless people in Ireland in November. While December could see a slight drop in numbers, as often happens around Christmas, the number of people becoming homeless is expected to increase in the first quarter or even the first half of 2022.
The ban on evictions during the immediate Covid crisis caused the number of homeless people to plummet to its lowest point, 7,991.
Mr Stanley hopes that the newly created Housing Commission, which will examine housing policy, will soon lead to a referendum on the right to housing. As part of its work, the 12-person committee is examining the wording of a constitutional amendment to enshrine such a right.
Mr Stanley believes this would allow for more radical action in terms of dealing with the housing crisis, such as easing rent freezes and eviction bans if necessary.
While experts and stakeholders have some hope for the coming year, they share many concerns. The end result for struggling buyers, tenants and homeless people in Ireland is that 2022 is likely to be another difficult year.