Housing supply will not meet demand for at least another three years – BPFI
Housing supply is unlikely to meet demand until at least the end of 2023, according to an analysis of the housing market by the Banking and Payments Federation Ireland.
The Federation concludes that the total number of completions will exceed 19,000 units for the year.
This is significantly higher than estimates produced in the early months of the pandemic when building sites were closed for several weeks to comply with restrictions.
Just over 21,000 units were completed in the whole of 2019, according to the Central Statistics Office figures, an increase of almost a fifth on the 18,000 completions in 2018.
However, according to various estimates from the Central Bank and other economic bodies, around 35,000 new units would need to be constructed per year to keep up with demand.
The BPFI concludes that this figure will not be met until the end of 2023 at the earliest.
It believes that, despite a better-than-expected completion outcome for 2020, there may be pressure on total completions next year.
It bases this on the figure for housing commencements – the process of starting to build housing units – which fell towards the latter part of this year.
The report cites figures for the first eight months of 2020 which show that commencement levels were at 13,314 units, a reduction of almost a quarter on the same period in 2019.
In the months of July and August alone, there were 3,200 commencements – a decline of around 37% year-on-year.
The declines were steepest in Dublin and the surrounding counties.
“There is a close relationship between the number of completions in a year and the number of commencements in the previous year,” Dr Ali Uğur, the chief economist of BPFI, explained in his analysis.
“Hence lower than expected commencement numbers in 2020 will put pressure on the number of new dwellings to be completed in 2021 at a time when most observers expected housing supply to catch up with both current and pent-up demand, estimated to be around 35,000 units. It is now likely that housing output will not reach these levels until the end of 2023,” he added.