Calls have been made for a radical overhaul of the government’s housing plan, as a new report today warned that Ireland is likely to produce less housing over the next two to three years than it did in 2023.
The study by construction consultants Mitchell McDermott found that Ireland’s housing output will be less than the 33,000 units achieved in 2023 for up to three years, predicting that 32,000 homes will be built this year. Suggesting that the government will miss its target of 33,450 homes for 2025, the study follows the release of official home completion figures from the Central Statistics Office last week. The CSO statistics showed that the number of new homes built last year exceeded just over 30,000 despite Government pledges that the number would be much closer to 40,000.
Mitchell McDermott’s analysis is likely to put pressure on new Minister for Housing James Browne, with the research warning that housing delivery across the country is predicted to “stagnate” over the next two to three years. The government has “little chance” of achieving its target of building 300,000 new homes by 2030 “unless drastic measures” were taken, the report says.
Co-founder and director at Mitchell McDermott and co-author of the report, Paul Mitchell, told Newstalk Breakfast that the vilification of vulture funds and an aversion to build to rent housing was limiting supply.
Discussing the “pessimistic report,” he told the programme on Thursday morning that a falloff in apartment projects was a key concern, Mr Mitchell said there were 9,000 apartments built last year, down from 12,000 in 2023, and this has been projected to fall further, to 7,000-8,000 this year.
“Unfortunately the reports follow all of the data. Housing output was down seven per cent last year to 30,000 units. That’s against a backdrop of a 50,000 unit target going forward. One-off housing was slightly down, but holding its own. Scheme housing or housing estates were slightly up by five per cent. But the main culprit was apartments, down 24 per cent. That could have been worse apart from government incentives – the LDA approved housing bodies helped to shore up the output,” he said.
INVESTMENT FUNDS
“We desperately need international capital to come back into the market to fund our build-to-rent. We basically need two things for that to happen. One is a lowering interest rate environment, which is happening, and the other thing is adjustment to rent caps,” he said.
The construction consultant hit out at what he sees as a vilification of vulture funds, in both the Dail and in the media. Mr Mitchell pointed out that a higher interest rate environment has made Ireland less attractive for funds to finance the development of apartments here.
To make Ireland more attractive for investment funds, he advocated adjusting the current rental cap regime, applying it to tenancies instead of buildings.
“At the moment, we have a situation whereby these funds, which are referred to pejoratively as vulture funds – we absolutely do not agree with that. These are pension funds, teacher’s pensions and police pensions from the State, that are just looking for a long-term home for their money to get a steady return.
“We’ve called them all kinds of names, we’ve put rules in place to keep them out of the country. And meanwhile, the only people who are affected are our young people and other people who are trying to get rental homes in Dublin. The apartments have not been addressed. We’ve known that the funds have left the country for the last two to three years. Yes, measures have been taken, but it’s not enough. We don’t have enough money in the State. We’re building at the moment cost-rental, social housing and affordable homes – all fantastic – but it’s not enough. The numbers are going to continue to fall in that regard.
Asked if the government’s stated target of building 50,000 homes a year was realistic, he said: “We’re not going to see that happen. We are certainly going to see housing increase in terms of scheme housing. We are certainly going to see an increase in that, but to hit the 300,000 units by 2030 – roughly 50,000 units a year – we would have to increase housing output by 60 per cent year on year.”
Pressed on what he would advise those in government to do, he urged them to address the issue of housing with incoming investment.
“And it is to court that investment. These investment funds are global, and they will go where they get the best return for their pension members. They are only going to come to Ireland if they’re sure that the regulatory environment is not going to change. We’ve referred to this before as a kind of ‘closing doors’ policy.
“As soon as we’ve had something that’s started to work – co-living, build to rent, rental in general – we start putting things in place. The opposition parties start coming in and voicing their concerns and the government side folds. We have to have strong leadership, and I think this is an opportunity for the incoming Minister to actually make a stand and push through, not to just fold when the pressure comes on.”
Mr Mitchell said that issues do persist relating to planning, and that just 40 per cent of applications for planning permission actually end in a building project being commenced.
The report noted that planning permissions, one of the key indicators of future supply, were granted for 35,000 homes last year, one of the lowest figures of the last six years and a decline on 41,000 homes in 2023.
“There’s still an issue with planning. We did an analysis this year and in part of our report, we look at something called a planning mortality rate. We looked at the fast-tracked planning from 2018 to 2024. We saw that roughly 200,000 applicants came in. And after you went through judicial reviews and withdrawals, you got down to 112,000. Now if you look at how many are actually being built or commenced, it’s only 40 per cent of the applications. To say that we are going to increase our numbers, it is bleak.”
Mr Mitchell of Mitchell McDermott said: “Our figures show schemes accounting for almost 42,000 units (21 per cent) were refused, a further 27,000 (13.5 per cent) were subjected to judicial reviews and 11,000 (5.5 per cent) are awaiting decision.
“Based on current ratios, if we want to build 50,000 units a year, we would need to have planning applications for 125,000 units submitted every year.”
“There are schemes getting refused by the planners, and rightly so in some cases. They’re not properly designed,” he added.
Asked if he thought the 2030 housing target could be achievable, he noted: “I think it is possible, but we have to change what we are doing right now. And we need international funds.”