Ireland faces a significant housing shortage, needing around 52,000 new homes annually until 2050, far exceeding the current target of 33,000. The Central Bank highlights a decade-long under-supply worsened by limited development finance, complex planning processes, and low construction productivity. Nearly 33,000 homes were built in 2023, but this falls short of demand. A rental increase cap and high building costs further complicate the situation. This shortage raises the cost of living and doing business, threatening Ireland's economic competitiveness and residents' living standards. The government is expected to review housing targets amid this ongoing crisis.
According to the Central Bank, Ireland may require approximately 52,000 new homes annually until 2050 to accommodate its expanding population. This number significantly surpasses the current government goal of 33,000 homes per year. The bank's report estimates that an extra EUR 7 billion (USD 7.8 billion) is required in development finance annually to fund these additional units. The report highlights strong demand for housing and anticipates ongoing population growth in Ireland in the coming decades.
Robert Kelly, the Central Bank of Ireland's Director of Economic and Statistics, stated that the Irish housing market has faced a decade of under-supply. He noted that although this issue is part of a global trend, Ireland's housing output as a percentage of national income has been significantly lower than the euro area average for some time. Government data shows that nearly 33,000 new dwellings were completed in 2023, more than double the number in 2017. However, significantly more housing is needed to meet demand, especially after strong economic growth in recent years. The government is expected to review its housing targets later this year, following an estimate from a housing commission that identified a shortfall of at least 212,500 residential properties two years ago.
Increasing the housing supply in Ireland is complicated by the prolonged halt in construction that followed the global financial crisis. The central bank identifies access to development finance as a key issue affecting the viability of building projects. It also suggests that obtaining debt and equity funding is further complicated by a complex planning process and low productivity in the construction sector. Homebuilder lobbyists argue that a 2% annual cap on rental increases in certain areas of Ireland makes financing projects even more difficult. The central bank warns that extending the imbalance between housing demand and supply could lead to economic costs. The report states that this situation leads to an increased cost of living, which consequently raises the cost of doing business in Ireland. This could harm the country's competitiveness and hinder the sustainable growth of living standards for Irish residents in the medium term.
Ireland faces a significant housing challenge, requiring 52,000 new homes annually until 2050 to meet growing demand, far exceeding the current target of 33,000 homes per year. The Central Bank's report highlights the urgent need for increased development finance and more efficient construction processes. Without addressing these issues, Ireland risks economic consequences, including higher living costs and reduced competitiveness.
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