There are encouraging indicators of increased supply in the housing market. But it will be a long way to any kind of normalcy in the rental market as, for potential home buyers, supply remains well below demand.
On the rental market, the exit of private owners continues at a sustained pace, with numerous sales, thus leading to the eviction of tenants. Sinn Féin TD Eoin Ó Broin estimates that an average of 80 private owners left the market every week in the last three months of 2021. High purchase prices are one of the reasons many are selling their property. Still, the high returns available to those who continue to rent homes suggest other factors are also at play. Landlords blame the regulatory and tax systems.
There is a strong pipeline, when properties started in 2019 and 2020 and not yet completed, are added in
Greater rental supply is expected to emerge due to government initiatives, particularly in the area of cost-priced rentals, as well as high-end properties financed by international investors. But there remains a gap in the market as small landlords leave and politics seem torn between increasing affordable rental capacity and homes to buy.
In terms of housing supply, a report by the Payments Banking Federation of Ireland (BPFI) highlights that completion levels saw a disappointing fall in the fourth quarter of last year, likely due to Covid closures. However, last year’s 30,700 starts represented a 42% increase from 2020, showing that the sector is responding. There is a strong pipeline, as properties started in 2019 and 2020 and not yet completed are added.
However, the BPFI warns that capacity in the construction sector remains an issue. This is due to two factors. One is the higher than usual level of absenteeism on construction sites, presumably due to Covid-19. The second is the general labor shortage. The threat of a blow to the economy from soaring energy prices could also affect housing. In this context, a key task for the government is to continue to increase volumes, come what may.