New homes supply only likely to start meeting demand by 2021, says Irish banking group
Housing supply has increased but will take to 2021 before coming anywhere to tackling pent-up demand, according to the business group that represents Irish banks and mortgage lenders.
In the report, the Banking and Payments Federation Ireland’s chief economist Ali Ugur said it will take three more years before new housing completions rise and even then pent-up demand may unlikely be sated.
New homes supply will rise from the 18,000 units built this year to 35,000 units — the number that is regarded as the level that starts meeting annual demand. The banking group suggests the 35,000 level will unlikely satisfy the pent-up demand created since the destruction of the house building industry.
“Assuming a growth rate of around 25% per annum in the short term for completions, it would take until 2021 for supply to meet the estimated demand of around 35,000 units per annum — notwithstanding the fact that latent demand will not have been addressed during this period,” Mr Ugur said.
As long as the construction sector does not hit any significant blockages in terms of staff requirements, completion numbers are likely to be around 22,000 units in 2019 with growth rates observed in commencement numbers,” he said.
The economist also highlights a large increase in the price of new homes: They have doubled to a median €330,000 in recent years. That compares with only a 40% increase in the price of existing homes, to €217,000, over the same period.
Meanwhile, shares in Irish house builders continued to fall. Shares in Cairn Homes fell 2% to bring its losses to almost 33% from a year earlier. Glenveagh Properties also fell 2% for a drop of 28% in the past year.
Housing supply has increased but will take to 2021 before coming anywhere to tackling pent-up demand, according to the business group that represents Irish banks and mortgage lenders.
