Key issues regarding the stability of the Irish economy seen in the housing market. The key issue of the housing crisis can be defined as growing demand that is not meet by current supply.
Many current government policies are concerned with increasing the volume of supply of completing housing units. For example, Rebuilding Ireland is associated with increasing housing supply to reduce homelessness. However, over the past 3 years supply has increased but housing prices have increased at a rate higher than the increase in supply. Governmental policies focus too much on supplying more volume instead of focusing on the affordability of housing.
According to Goodbody BER Housebulding Tracker, it is estimated that an additional 18,855 new housing units were added in 2018. This estimation is in line with previous forecasts. The majority of new dwelling competitions in 2018 were located in the Greater Dublin Area. More specifically, housing completions in the Greater Dublin Area accounted for 60% of the total new housing schemes in 2018. Although there has been an increase in the supply of housing, many problems in regard to viability, breadth of activity and affordability remain. For example, housing schemes saw the largest increase in output while apartment output increased minimally.
Output of apartments was lower than anticipated and demanded due to viability and uncertainty of planning regulations. In 2018, restrictions regarding height and building size were lifted. There is an anticipated increase in apartments in 2019 due to the lifted planning restrictions.
The increase in supply of units is welcomed, but it must be accommodating to the demands of the population. The demand for affordable housing is growing as the implications on society amplify. For example, families are living in emergency accommodations or are living on the streets due to staggering housing prices. There needs to be a shift in focus on the affordability of newly supplied homes.
In an analysis of income earners compared to the price of homes, the largest portion of houses for sale in 2018 fell to prices ranging from €205k to €287k. According to the Goodbody Irish Economy report, one out of three earner’s affordability falls in less than the €205k price range. However, only one in five homes were on the market for less than €205,000. This illustrates the massive issue of promoting development of affordability for the average Irish individual.