A report on housing published this morning by Davy’s estimates that 200,000 new houses will have to be built over the next three years. That will require an average annual new build of 66,600
Less than 21,000 were built in 2020, with an even smaller number of completions projected for 2021.
This will be to meet a latent demand estimated by Davy’s to have been 106,000 last year, in addition to a further 30,000 new houses every year to meet new demand.
The bad news for those seeking a home is that a combination of demand and under supply will lead to significant inflation in house prices and construction costs. The report implies that, far from representing a solution, the current proposals by both the government and the opposition to stimulate demand in the absence of realistic proposals to meet that demand will exacerbate the problem.
Davy’s housing projection takes into account an increase in population of 240,000 in the past five years. Much of that of course has been due to immigration, and we have looked previously at how that will continue to be a key factor in the housing market over the next 20 years.
All of the main political parties not only accept this but, as we have seen, have both consistently under-estimated the actual level of inward migration, and are basing their future projections on factors completely outside of the control of the Irish state.
An indication as to how random population estimates are is the discrepancy between different models. The ESRI, as we have reported previously, estimates a population in the state of 5.66 million by 2040, but closer to 6 million in a “high migration scenario.”
The United Nations estimate, based on likely trends, was for 5.49 million in 2040. That is a difference of between 170,000 and over 400,000. (It should be noted too that the UN projection for 2016 was 66,000 lower than the Census.) Not small beans at all when this will be the main factor in not only future housing demand, but in public provision in education, health, policing, and so on.
Perhaps, amid all the promises and plans for housing, someone might consider actually looking seriously at how to cope with the main driver of population growth over the next decades?
The elephant standing in the corner might make the proverbial horse in the Ballymun elevator look like a minor conundrum.