According to a new report from stockbroker Davy, Ireland’s housing crisis has arrived at a critical juncture, with 93,000 new units needed each year for housing stock per adult to return to its previous ratio of 0.55 if our population grows to six million by 2031.
With each passing year and the fundamental problems remaining unresolved, both pent-up demand for housing and the scale of the challenge have grown larger. The situation is unique internationally, owing to a major lack of supply, and the report states that resolving this demands its place at the very top of the new Irish government’s list of priorities.
The report calls for urgent reforms, including overhauling strict rent caps, several measures to reduce housing construction costs, and further streamlining the planning system for critical infrastructure, including housing development.
Assuming these reforms take place, Davy forecasts that output could rise to 75,000 new units in 2031, driven by higher social housing and institutional investment. In the absence of necessary reforms, however, a lower output level well below the overall need is likely.
At just 30,000 completions, housing output in Ireland was disappointing in 2024. This added to an already sizeable pent-up demand for circa 230,000 homes, or more than 10% of the housing stock. Davy assesses that the extent of housing need has been systematically underestimated due to an unexpectedly strong economic and population backdrop. Capital financing requirements are substantial and could top €40bn by 2031.
Speaking on RTE Radio 1, Davy’s Chief Economist Kevin Timoney said that, at best, Ireland can build up to 75,000 houses a year by 2031 despite demand by this time requiring more. This would “be a stabilisation of the situation” as it will “still leave the country short of what’s needed”. He added that for the forecast figure to be achievable, “Some reforms are necessary”, including apartment delivery.
Addressing Ireland’s weak construction productivity can unlock much higher housing output while reducing the risk of overheating in response to the higher level of activity. Davy notes that this opportunity provides the two listed homebuilders, the three domestic banks and the Irish economy in general with much headroom to grow.
To read the full review, visit https://publications.aecom.com/ireland-annual-review/
